Is CARB Getting Cold Cash from Global Warming?

Some call Assembly Bill (AB) 32 the “Global Warming Solutions Act.” Others see it as a job-killing-money-maker for big government. Anyway you look at it, the controversial bill, which was signed into law by Governor Arnold Schwarzenegger on September 27, 2006, is here and California has to deal with it.  

But not everyone is taking the regulation-laden law lying down. Just a few days ago the California Chamber of Commerce sued the California Air Resources Board (CARB), saying that it exceeded the authority granted to it under AB 32 in establishing the revenue raising program.

The complaint, filed in Sacramento Superior Court on November 13, seeks to invalidate the auction portion of the “cap and trade,” and says that AB 32 does not give CARB the power to levy fees other than those needed to cover ordinary administrative costs of implementing a state emissions regulatory program.

In other words, why should CARB rake in billions of dollars in carbon offset credits when the credits should be free in the first place? Shouldn’t a business pay for the credits only if and when it exceeds its allotment?  Isn’t this a sort of tax not clearly stated in the bill?

“What was not authorized by AB 32 is the Board’s decision to withhold for itself a percentage of the annual statewide greenhouse gas (GHG) emissions allowances and to auction them off to the highest bidders, thus raising from taxpayers up to $70 billion or more of revenue for the state to use,” reads the complaint by CalChamber.  

The lawsuit does not contest AB 32’s global warming issues. The only issue addressed in the suit is the portion of CARB’s regulatory program that seeks to permit the Board to allocate to itself GHG emissions allowances and to profit by selling them to GHG emitters.

CalChamber other members of the business community, members of the Legislature, the Legislative Analyst’s Office and CARB have all highlighted the fact that the auction is not needed to achieve the goals of AB 32.

The business community has repeatedly underscored the fact that the auction will raise energy costs significantly in the state, harm the economy and impact California’s competitiveness, without providing any additional environmental benefits.

“AB 32 gives California the opportunity to be the leader in reducing carbon emissions,” said Allan Zaremberg, President and CEO of the California Chamber of Commerce, in a press release. “Unless we adopt the most cost effective way of reducing carbon emissions, other states will not follow us. The current CARB proposal is the most costly way to implement AB 32 and it will hurt consumers, the job climate, and the ability of businesses to expand here.”

The suit also did not stop the first day of auctioning, which went ahead on schedule on November 14.

AB 32 requires the (CARB) to develop regulations to reduce California's greenhouse gas emissions to 1990 levels by 2020, representing a 25% reduction statewide, with mandatory caps beginning in 2012 for significant emissions sources. The bill provides the Governor the ability to suspend the emissions caps for up to one year in the case of an emergency or significant economic harm.