California's top air pollution regulator issued a spirited defense today of the state's new cap-and-trade greenhouse gas market, rejecting pleas from businesses to make significant changes to the program.
Mary Nichols, chair of the California Air Resources Board, said the carbon market is designed to minimize the impact on businesses.
Big business groups, like the California Chamber of Commerce, were scheduled to testify later today about their objections to the cap and trade market, the centerpiece of the state's global warming law, AB 32.
Businesses say the market amounts to a $1 billion-plus annual tax that will destroy jobs and drive manufacturers, food processors and others out of the state.
The Air Resources Board wasn't expected to take any action today. But Nichols delivered a stinging critique of the business groups' protests, saying it's time for them to "join us to help us make this work."
She added, "The system rewards those who are most efficient."
The program works this way: Some 430 big industrial users will be subject to an emissions ceilings, or "cap." They will get tens of millions of emissions allowances, each one representing the right to spew a ton of carbon. Most of the credits will be given out for free, but 10 percent will be sold at a series of state-run auctions beginning Nov. 14. Companies that scale back their emissions will be able to sell their unneeded credits to other companies.
It's the auction that's the focus of the business group's ire. While the agency is mulling a plan to give out more of the emissions credits for free in later years, the business lobbyists want the extra freebies right in the first year of the program. Some groups are pushing for all of the credits to be given for free, eliminating the state's auction.
But state officials believe an auction is necessary to establish a price for emitting carbon. Nichols said a system based solely on free emissions credits would weaken the whole program and create "a windfall" for many companies.
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