California's Bay Area Quality Management District Board of Directors voted 15 to 1 to implement a tax on companies that emit 4.4 cents per ton of carbon dioxide. The tax is the first of its kind in the U.S.
The tax affects nine Bay Area counties, including San Francisco, and will take effect on July 1. The majority of businesses would pay less than $1, the district estimates, but seven power plants and oil refineries would pay over $50,000. The tax will generate $1.1 million in 2009, according to the air district's projections.
The tax will "help cover the costs of the District's Climate Protection Program activities related to stationary sources of air pollution," the air district's website states.
"We see a direct connection between the climate and air pollution," said Jack Broadbent, the district's executive director.
The tax has critics and fans. "I think this is tremendously gutsy," said Dan Kammen, a Harvard University-trained physicist who is director of renewable energy programs at the University of California-Berkeley."
Kammen adds, "Emissions in California are still going up. All the nice paperwork is not going to make emissions go down until we put a price on what we don't want - which is greenhouse gas emissions. What the air district is doing is what every economist knows is coming - but somebody has to go first."
"Industrial polluters should face financial consequences for contributing to global warming," said Linda Weiner, director of air quality advocacy and outreach at the American Lung Association of California. "As the planet warms, that means more smog, asthma, hospitalizations. This is a very modest fee, but the cost to the planet and health care system will be much higher."
The California Air Resources Board recently stated that carbon trading will only reduce greenhouse gas emissions by 40 percent. CARB (California Air Resources Board) Chairwoman Mary Nichols says, "I would say that more than half, probably 60 percent of the CO2 reductions that we're going to achieve in California will come from programs that are aimed at particular sectors," Nichols said.
"Which doesn't mean that there wouldn't be some trading or shifting allowances back and forth within that sector, or market-type compliance mechanisms that allow the flexibility of banking ... but in terms of a broader, economy-wide cap with trading, I think it's going to be more aimed at the areas that you can't effectively control with a more targeted regulation," Nichols adds.
The California Chamber of Commerce expressed concerns about the tax in a letter to air district Chairman Jerry Hill that the "regulation system at the Bay Area district will make Bay Area businesses less competitive because companies outside of the region will not face similar costs."
Some opponents to the tax are concerned it conflicts with California's Global Warming Solutions Act passed in 2006, or AB 32, which gives the California Air Resource Board the task of developing regulations for greenhouse gas emissions.
Shelly Sullivan, head of the AB32 Implementation Group, says, "It's going to make Bay Area businesses less competitive because companies outside the area won't face similar costs," Sullivan said. "There would be a patchwork of plans that would not be consistent."
The air district board refutes that claim, and notes that "AB 32 specifically does not limit the existing authority of any air district."
