California has created a market out of thin air. On December 16, the California Air Resources Board (CARB) endorsed (by a vote of 9-1) the cap-and-trade regulation with the goal of reducing California’s greenhouse gas emissions under Assembly Bill 32, the Global Warming Solutions of 2006 law. The regulation limits emissions from sources responsible for 80 percent of California’s greenhouse gas emissions. The plan hopes to establish a price signal to drive long-term investment toward “cleaner” fuels and more efficient use of energy.
“This program is the capstone of our climate policy, and will accelerate California’s progress toward a clean energy economy,” said CARB Chairman Mary D. Nichols in a CARB press release. “It rewards efficiency and provides companies with the greatest flexibility to find innovative solutions that drive green jobs, clean our environment, increase our energy security and ensure that California stands ready to compete in the booming global market for clean and renewable energy. The cap-and-trade program provides California with the opportunity to fill the growing global demand for the projects, patents and products needed to move away from fossil fuels and to cleaner energy sources.”
Right after monkeys fly out of her butt.
According to CARB’s press release, “The cap-and-trade program and the other measures to reduce greenhouse gases provide a model for action that can be used at the federal, state and regional levels. As climate policies are being addressed worldwide, California’s early actions are positioning its economy to reap the benefits on the world stage and are catalyzing action throughout the country and the world.”
Really, “a model”?
Perhaps, but CARB and Chairman Nichols seem out of touch or unaware of the example of the Danish carbon emissions registry which has so far cost treasuries in Denmark and other European countries some 5 billion euros (about US$7 billion). (Source: PBS. Carbon Carousel: European Market a Haven for Tax Fraud) At its zenith the Danish carbon registry had 1256 registered traders, most of them fake. As the Telegraph reported, “the attraction of carbon permits is their intangible nature, so there is no need physically to ship goods across borders. All is done at the click of a mouse.” And, so far, legitimate carbon exchanges such as the Chicago Climate Exchange and Montréal Climate Exchange “have proven to be lackluster at best and dismal failures in general. Carbon prices are nearly $0 per ton.
As for “green jobs”? A Spanish study of Europe’s effort at creating green jobs did two analyses. The study show that the economy loses over two jobs for every green job created. “[T]hrough the use of both methods we have reached a similar conclusion: for every green job, we can be highly confident that 2.2 jobs are destroyed elsewhere in the economy, to which we have to add those jobs that the non-subsidized investment would have created.” Subsidies and taxes cost money, and that money comes from salaries saved.
The regulation will cover 360 businesses representing 600 facilities and is divided into two broad phases: an initial phase beginning in 2012 that will include all major industrial sources along with utilities; and, a second phase that starts in 2015 and brings in distributors of transportation fuels, natural gas and other fuels. Electric utilities will be given allowances and they will be required to sell those allowances and dedicate the revenue generated for the benefit of their ratepayers and to help achieve AB 32 goals. By the end of the program in 2020 there will be a 15 percent reduction in greenhouse gas emissions compared to today, reaching the same level of emissions as the state experienced in 1990, as required under AB 32.
There are also provisions to develop international offset programs that could include the preservation of international forests. A Memorandum of Understanding has already been signed with Chiapas, Mexico, and Acre, Brazil, at the Governor’s Global Climate Summit 3 to establish these offset programs. Such provisions drew praise from some, “The Pacific Forest Trust commend the California Air Resources Board for all the extraordinary and pioneering work they have done to craft this blueprint for California’s market-based system addressing climate change,” said PFT President Laurie Wayburn. “This truly is a historic moment. It’s exciting to see California leading the way yet again with a robust cap and trade program that creates incentives for U.S. landowners to conserve and steward our forests as a vital climate defense.”
Carbon trading looks like a bad idea whose time has come. As Roger Helmer, a member of the European Parliament puts it, “Carbon trading is wrong on so many levels…many studies have shown that plans to slash fossil fuel use, even if fully implemented, would have a trivial impact on the trajectory of climate – perhaps a tenth of a degree by 2100. And that assumes carbon dioxide really is the driving force in climate change. If it’s not, we get zero benefits, at a huge, economically devastating, wealth-redistributing price tag…[and] most of the authoritative economic studies on carbon trading demonstrate clearly that its costs always greatly exceed any conceivable benefits.”
CARB’s cap-and-trade regulation will either drive the development of green jobs or drive business out of California.