Air Resources Board Set to Turn Cap-and-Trade to Cap-and-Tax

Many of the California businesses and industries directly regulated under the state’s cap-and-trade greenhouse gas emission reduction program supported Assembly Bill 398, which was enacted last year. This bill reformed and extended the program through 2030, ensuring continued climate leadership and environmental integrity while mitigating potential consumer cost increases related to higher prices for fuel, energy and consumer goods.

A well-designed cap-and-trade program is critical to protecting consumers and industry while meeting our climate change goals. It is far superior to and more cost-effective than command-and-control regulatory schemes that would lead to higher energy prices for consumers and businesses and that would not necessarily ensure that the state achieves greenhouse gas reduction targets.

California manufacturers, food processors and many other companies appreciate that AB 398 includes cost containment provisions necessary to prevent volatility and large spikes in carbon pricing.

However, the California Air Resources Board’s (CARB) current consideration of proposed cost containment levels is cause for concern. Specifically, AB 398 directed CARB to modify the program’s cost containment mechanism by developing safeguards that the Legislature intended to regulate the market, anticipate problems and ensure stability. The expectation is that CARB will develop a carbon price ceiling, plus two intermediate cost containment points (speed bumps) that create more certainty in the market and encourage greater investment in new technologies that reduce greenhouse gas emissions.

Click here to read the full write-up by the Valley Industry & Commerce Association (VICA).

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