Another View: California cap-and-trade will be costly

Published Friday, May. 04, 2012

Allan Zaremberg, president and CEO of the California Chamber of Commerce, is responding to the April 29 Viewpoints article, "Cap and trade has lessons for California." That commentary argued that a cap-and-trade system for utilities in the Northeast "has boosted the economy of every state that has participated."

Reducing carbon emissions in California will cost consumers and businesses money, but that can be mitigated by a well-designed market mechanism, also called cap-and-trade. But the recent commentary by Paul Hibbard ignores the fundamental flaw in California's cap-and-trade auction: It imposes billions of dollars in unnecessary taxes on the California economy without reducing a single molecule of greenhouse gases.

Using markets to reduce pollution is enlightened regulation, especially compared with the typical command-and-control schemes favored by state regulators. Cap-and-trade sets a limit on carbon while the private sector determines how much it will pay for the privilege of emitting greenhouse gases, in the form of emission allowances.

But the California auction turns this concept inside-out. Over the life of the program, the state will sell half of the emission allowances. Selling allowances has nothing to do with the cap, but this new tax will raise billions of dollars for pet projects – new spending by the same Legislature that has presided over enormous budget deficits.

To read the entire article go to: http://www.sacbee.com/2012/05/04/4464809/california-cap-and-trade-will.html