Emissions fees on businesses get state OK
By Samantha Young
ASSOCIATED PRESS
2:00 a.m. September 26, 2009
SACRAMENTO - Despite industry objections and threats of lawsuits, California
air regulators yesterday approved the nation's first statewide carbon fee on
utilities, oil refineries and other polluting industries.
The money raised by the California Air Resources Board, which voted 9-0, is
intended to pay for the bureaucratic expenses of carrying out the state's
2006 global warming law, which requires greenhouse gas emissions statewide
to be reduced by 25 percent over the next decade.
"It's never pleasant to be in the position of asking consumers to pay,"
chairwoman Mary Nichols said at the board's meeting in the Los Angeles
County suburb of Diamond Bar.
Nichols said the action is an acknowledgment that limiting greenhouse gases
will come with a price. "If you're going to start a new program, I think it
makes a lot of sense to be asking that it is a pay-as-you-go program, and
that's what we're doing here," Nichols said. The Legislature had required
the board create such a fee. The fee will be imposed at the end of 2010 and
raise $63.1 million annually during its first three years. The amount will
level off at $36.2 million in the fifth year.
Oil companies, manufacturers and utilities complained that regulators had
unfairly singled them out by leveling the fee on 350 businesses in the
state. Some business leaders also questioned the timing of the fee, which is
being imposed while California endures a 12.2 percent unemployment rate, the
highest on record.
"Given the economic climate, we believe it is extremely unwise to ask
businesses to pay more government fees," said Jacque McMillan, a member of
the Valley Industry & Commerce Association, which represents businesses in
the San Fernando Valley.
Republican gubernatorial candidate Meg Whitman earlier this week drew the
ire of Gov. Arnold Schwarzenegger when she described the 2006 law he signed
as a "job killing" regulation. Whitman said she would suspend it if elected
governor until its effects on the economy are better understood.
Part of the fee would cover the salaries of 174 people hired to implement
the law since Schwarzenegger signed it.
About 350 businesses in California that make, sell or import gasoline,
diesel, natural gas and coal would be charged about 15 cents for every ton
of carbon dioxide they and their customers emit into the atmosphere.
The average refinery would pay about $4.7 million and the average cement
plant would pay about $150,000 a year, said Jon Costantino, manager of the
climate change planning section at the air board. Cement plants would be
subject to the fee because the chemical process they use to make cement
produces greenhouse gases.
The charge would drop to 9 cents per ton of carbon dioxide in 2014 because
loans approved in past years by the Legislature to initially run the program
would be paid.
Regulators said the industries asked to pay the fee represent the starting
point for about 85 percent of California's greenhouse gas emissions. For
example, refineries process the fuel that California drivers put into their
cars, and utility plants generate the electricity used to cool and heat the
homes of the state's 38 million people.
The approach won the endorsement of environmentalists and public health
advocates who have long blamed industry for making products that pollute the
air and sicken residents.
"California taxpayers have already borne the burden of this economy," said
Bill Haller, a volunteer with the Sierra Club of California. "It's time for
the polluter to pay for the pollution. They created it, they profited from
it, and they should pay for it."
Regulators said industry could pass along the fee to consumers by raising
their prices. For example, a family restaurant would see an increase of
about $17 a year in its electricity and natural gas costs. The extra cost to
each Californian to fuel a car that gets 30 mpg would be about 80 cents a
year.
Oil companies and several utilities argued the fee unfairly holds them
accountable not just for their emissions but also for those generated by
people who use their products. They also warned that regulators were
proposing a fee that violates federal commerce laws by assessing a state fee
on gasoline and electricity exports.
"There will be potential federal court challenges on the Commerce Clause
because you're assessing fees on fuels going to other states - Nevada,
Arizona and Texas," said Catherine Reheis-Boyd, chief operating officer at
the Western States Petroleum Association.
A few local government entities have adopted similar fees. Last year, air
regulators in the San Francisco Bay Area imposed a 4.4-cent-per-ton carbon
fee on businesses that emit greenhouse gasses. In 2006, voters in Boulder,
Colo., imposed a carbon tax on their own energy use. |
