Will California’s carbon market spur cleantech growth?

By Felicity Carus
October 21, 2011

(This article by Felicity Carus first appeared on Clean Energy Connection and has been edited for length. Any opinions expressed are her own.)

Before California regulators announced they unanimously approved regulations for a cap and trade market on Thursday, the chair of the California Air Resources Board made much ado about the impact it would have on the development of clean technology in the state.

Chairwoman Mary Nichols said in her opening remarks : “Cap and trade sends a policy signal to the market and guarantees that California will continue to attract the lion’s share of investment in clean technology.”

Unlike a public meeting last December, when there were less than a handful of opposing voices, opponents of cap and trade from steel unions and oil refineries attended in great numbers this time.

BP America and the Western States Petroleum Association were among those who lined up for their 3 minutes in front of the board to complain about the “10 percent haircut” for oil refineries because the benchmarking gives free allocation for only up to 90 percent of emissions.

The board has this year introduced a best in class benchmarking system so that at least one installation in each sector will be allocated 100 percent allowances.

While examples were given for the cement and glass sectors, perhaps many of California’s refineries fear they will flunk the class, even though, as board staff pointed out the benchmarking in the EU system had been set at a more “ambitious level”.

Chris Riley described himself as a “concerned citizen employed by Valero” which attempted to spike the cap and trade scheme last year through the ballot box with Prop 23.

“I’m concerned about how these emission taxes and in general this will have impacts on our families and higher energy costs that will be incurred consequently what will happen to our jobs,” Riley said.

ConocoPhillips staffmembers also took the mike to defend their jobs.

Lisa Bowman, a ConocoPhillips staffer, made an impassioned testimony at the about how her company had allowed her as a single mother to bring up her children without government support. She asked the board for “leeway” to meet the regulations on behalf of her employer.

California’s stringent regulations on refineries makes building a new installation prohibitively expensive, while the refineries themselves say they are already working to optimal levels of efficiency.

Mike Wang, of the Western States Petroleum Association, said: “Our facilities are the cleanest in the world and they produce the cleanest products. What you are hearing from us is can we choose alternatives to the 10 percent reductions in allocations. Can we achieve the goals of AB32 more easily?”

So far, CARB’s rules have been subject to legal challenges from environmentalists, not industry. But that may change once implementation approaches and it will be interesting to see how Californian oil refineries respond to mandates which will force innovation.

Electricity generation in California produces 20 percent emissions in the state which mostly burns natural gas to produce electricity.

Metrics will be vital to California’s scheme but carbon reductions shouldn’t be the only thing CARB measures – progress in cleantech innovation and job creation will be vital too.

But new and unforeseen opportunities would inevitably arise from the cap and trade scheme – along with the unintended negative consequences, Nichols said.

“When the nation is ready to address the growing danger of climate change as I believe it must and it will California’s climate program will serve as the model for a national programme. We believe that if we implement a cap and trade program in California other states, the federal government and other nations will join with us.”

(Photo above shows The sun rises behind windmills at a wind farm in Palm Springs, California, February 9, 2011. REUTERS/Lucy Nicholson)

2 comments

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We’ve been asleep on this issue; see Tradingonthinair.com
and think twice before cheering the passage of cap and trade here

Posted by strength | Report as abusive

Everyone has been focusing on cars to reduce emissions for the last 30 years, and for good reason. At the same time, these low emission cars have been driving past homes in the northeast belching out black smoke from their chimneys from burning oil for heat and hot water. Delivering natural gas to everyone in the northeast is the single biggest thing we can do to reduce emissions. And natural gas is home grown, we create jobs and keep the money at home, and reduce carbon emissions. Solar and wind are not prime yet.

Posted by somethingstinks | Report as abusive