California weighs global warming fees on producers

From the Silicon Valley Mercury-News:

California air regulators on Thursday will consider leveling the nation's first statewide carbon fee on utilities, oil refineries and other industries as a way to pay for the state's landmark greenhouse gas emissions law.

The move comes at a time of rising unemployment and great economic uncertainty in the nation's most populous state, prompting concerns that the regulatory fee will impose yet another burden on California's struggling business climate.

If approved, the fee would raise $51.2 million annually for the next three years to fund the bureaucracy needed to implement California's 2006 global warming law. The total would drop to $36.2 million by the fifth year.

The fee would cost the average cement plant, for example, about $200,000 a year.

Industry groups say the proposal by the California Air Resources Board unfairly singles them out to pay for the law, which was a Democratic proposal but has generated worldwide publicity for Republican Gov. Arnold Schwarzenegger, its main cheerleader.

"This small group is paying for the whole program. It's really not economy-wide. We need something more broad-based," said Michaeleen Mason, director of regulatory issues at the Western States Petroleum Association.

She said the fee comes at a time when many companies say they can least afford to pay it. California's unemployment rate for May was 11.5 percent, the highest in modern record-keeping.

Beginning in 2010, about 250 businesses in California that make, sell or import gasoline, diesel, natural gas and coal would be charged roughly 12 cents per ton of carbon dioxide that both they and their customers emit into the atmosphere.

Cement plants also 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 run the $36.2 million program would be paid.

Air regulators say they need the fee to carry out the California Global Warming Solutions Act, which seeks to reduce emissions in the state to 1990 levels by 2020. It is intended to cover the salaries of 174 people hired since Schwarzenegger signed the law, which authorized the board to charge an administrative fee....MORE