California, a pioneer in U.S. green policy, began auctioning carbon emission allowances on Wednesday (14th). This is the world's second-largest greenhouse gas emission reduction program after the European Union.
The California Air Resources Board stated that this online auction could make California the world's second-largest carbon emissions market.
Under this plan, the California state government sets an annual emission cap for polluting industries. Businesses have two options: either reduce their emissions below the cap or purchase allowances from other companies that have not reached the cap for every ton of carbon they exceed.
The committee stated that the auction results, including the price per tonne of carbon and the number of companies participating, will be announced on the 19th of this month. California adopted a global warming management mechanism called AB32 in 2006, with caps/trades being the core of that mechanism.
California has passed emissions reduction regulations that Washington has been unable to enact, and the world is closely watching the outcome of this auction.
Currently, only the European Union has adopted such a large-scale emissions reduction plan, making Europe the world's largest carbon market. The northeastern United States also has a cap-and-trade system, but it only regulates power plants and is much smaller in scale.
UC Berkeley energy economics professor Polrenstein said that if the California plan fails, it will be a very serious blow to the United States' efforts to reduce carbon emissions. He stated that if the United States ever comes up with a nationwide carbon reduction plan, capping/trading is probably the most likely approach.
To encourage businesses to use new technologies to reduce emissions, 90% of their emissions quota will be free for the first two years of the cap/trade scheme, but the cap will be lowered thereafter so that carbon emissions can be reduced year by year.
Businesses that reduce their emissions below the limit can sell any unused allowances at the next auction. Additionally, businesses can accumulate "points" to invest in forestry or other carbon reduction projects; these points can offset up to 8% of a business's emission allowances.
Some affected businesses say that increased costs by Californian operators will lead to job losses in California. Some business executives point out that California's regulations may prompt businesses in neighboring states to increase production or lower costs to steal their business.
Industry players argue that California's auction method amounts to a tax increase on businesses. The California Chamber of Commerce has filed a lawsuit, stating that selling quotas is equivalent to illegal taxation because taxes require a two-thirds majority vote in the state legislature. However, the California Air Resources Board maintains that the method can withstand legal scrutiny.
The committee estimates that the sale of quotas in the 2012-13 fiscal year could generate approximately US$1 billion (about NT$29.1 billion) in revenue.
Sources: Lianhe Wanbao (2012-11-15)
