2011

Via the Los Angeles Times.

Ironically, the cap-and-trade program has been temporarily halted due to a lawsuit brought forth by other environmental groups, concerned that the CARB did not sufficiently consider alternatives to a C&T program such as a direct carbon tax:

The groups contend that a cap-and-trade program would allow refineries, power plants and other big facilities in poor neighborhoods to avoid cutting emissions of both greenhouse gases and traditional air pollutants.

“This decision is good for low-income communities like Wilmington, Carson and Richmond,” said Bill Gallegos, executive director of Communities for a Better Environment. “It means that oil refineries, which emit enormous amounts of greenhouse gases and contribute to big health problems, cannot simply keep polluting by purchasing pollution credits, or doing out of state projects.”

This logic is odd, as even under a cap-and-trade program, oil refineries won’t simply disappear. It’s possible that they might be required to reduce their own pollution rather than buying permits, but this speaks mainly to the design of the cap-and-trade program. A small carbon tax would likely have the same effect, and if the design of the cap-and-trade program is any hint, it would be difficult to pass a significant carbon tax.

However, given that the program involves distributing initial permits to many companies for free (which, according to Wikipedia, will cover 90% of their emissions), a pure carbon tax would involve less corporatism.

Do recall the CARB press release touting the economic benefits of this program:

The economic analysis compares the recommendations in the draft Scoping Plan to doing nothing and shows that implementing the recommendations will result in:

• Increased economic production of $27 billion
• Increased overall gross state product of $4 billion
• Increased overall personal income by $14 billion
• Increased per capita income of $200
• Increased jobs by more than 100,000

and subsequent commentary offered by peer review (many of whom support the program, none of whom buy into the free-lunch aspect):

Professor Robert Stavins, the Director of Harvard’s Environmental Economics Program:

I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the State government or the public for the purpose of assessing the likely costs of CARB’s plans. I say this with some sadness, because I was hopeful that CARB would produce sensible policy proposals analyzed with sound scientific and economic analysis.