State-wide carbon fees proceed

California's leadership continues in moving to the new clean energy economy. The state is proceeding with fees that will begin to shift incentives from old polluting technologies to energy from sources that never run out.

Despite industry objections and threats of lawsuits, California air regulators on Friday approved the nation's first statewide carbon fee on utilities, oil refineries and other polluting industries.

The money raised by the California Air Resources Board, which voted 9-0, is intended to pay for the bureaucratic expenses of carrying out the state's 2006 global warming law, which requires greenhouse gas emissions statewide to be reduced by 25 percent over the next decade.

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The fee will be imposed at the end of 2010 and raise $63.1 million annually during its first three years. The amount will level off at $36.2 million in the fifth year.

Oil companies, manufacturers and utilities complained regulators had unfairly singled them out, leveling the fee on just 350 businesses in the state.
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About 350 businesses in California that make, sell or import gasoline, diesel, natural gas and coal would be charged roughly 15 cents for every ton of carbon dioxide that they and their customers emit into the atmosphere.

The average refinery would pay about $4.7 million and the average cement plant would pay about $150,000 a year, said Jon Costantino, manager of the climate change planning section at the air board. Cement plants would be subject to the fee because the chemical process they use to make cement produces greenhouse gases.

The charge would drop to 9 cents per ton of carbon dioxide in 2014 because loans approved in past years by the Legislature to initially run the program would be paid.

Among the things that this fee will enable is a rampup in improved energy performance such as the work by the Public Utilities Commission. Improved energy performance will pay tiself back many times over with great benefit to the economy.

State regulators yesterday committed more than $3 billion over the next three years for programs aimed at getting people to use less energy by retrofitting 130,000 homes, training 15,000 workers and using smarter appliances.

The programs will be coordinated by California's four investor-owned utilities and paid for through electric and gas bills.

The initiatives, which are an expansion of efficiency efforts long in place in the state, mark a change in direction by moving away from rebates for devices such as light bulbs and instead making buildings more efficient.

“The focus is to shift priorities away from rebates for widgets to sustained energy savings in the built environment,” said Dian Grueneich, a member of the California Public Utilities Commission, which approved the programs yesterday.

By increasing efficiency, efforts in 2010 through 2012 should preclude the construction of three 500-megawatt power plants; save almost 7,000 gigawatt-hours of electricity and 150 million therms of natural gas; and keep 3 million tons of greenhouse gases out of the atmosphere, Grueneich said.