By Paul Rogers
InsideBayArea.com
February 9, 2008
In the first such program in California — and perhaps the
nation — Bay Area air pollution regulators are proposing to
charge thousands of businesses an annual fee based on the
amount of greenhouse gases they emit.
The fee — 4.2 cents per metric ton of carbon dioxide —
would affect everything from oil refineries to power plants,
and landfills, factories and small businesses such as
restaurants or bakeries.
The largest emitter of greenhouse gases in the Bay Area,
the Shell oil refinery in Martinez, would pay $186,475 a year
for its 4.4 million annual metric tons of emissions. The
largest emitter in Santa Clara County, the Hanson Permanente
Cement Plant in Cupertino, would pay $44,507 a year for its
1.05 million tons.
After years of voluntary measures, the fees, proposed this
week by the Bay Area Air Quality Management District, set a
precedent as the first time that businesses and government
agencies would face financial consequences for contributing to
global warming. If successful, the fees could be copied all
over the state and country, perhaps ultimately at much higher
prices.
"The climate is changing and we think that everybody
needs to help with the solution and pay their fair share to
reduce greenhouse gases," said Jack Broadbent, executive
officer of the Bay Area Air Quality Management District, in
San Francisco.
"This is the next step in addressing the problem. The
public is demanding that we be part of the solution."
The air district, a state agency, for the past 50 years has
regulated smog in seven Bay Area counties — Alameda, Contra
Costa, Marin, Napa, San Francisco, San Mateo and Santa Clara
— and in portions of two others (Solano and Sonoma).
The air district's board will begin discussing the rule as
early as late February and could take a final vote by May.
Almost certain to draw controversy and national attention,
the proposal is designed to raise $1.1 million a year,
Broadbent said.
It is not a "carbon tax," but a cost recovery
fee, he said, because the money would not go into a general
fund, but would be used instead to pay for the air district's
global warming reduction programs.
The proposal also is being closely watched around the state
because it would represent the first time that companies have
been hit with fees based on their greenhouse gas emissions.
Nearly every program in the United States to reduce greenhouse
emissions has been voluntary to date.
Environmentalists on Friday called the proposed rule a
watershed event.
"There are costs associated with emitting carbon
dioxide and the people who emit it should pay the costs,"
said Carl Pope, national executive director of the Sierra
Club.
Pope noted that the U.S. Supreme Court last April ruled
that carbon dioxide is a pollutant that can be regulated under
the Clean Air Act just like other chemicals that cause smog.
That changes everything, he said.
"That ruling is going to trigger a whole series of
regulatory responses like this," Pope said. "This is
the first one that has a fee associated with it. You are going
to see fees, and emissions standards, and permits for
coal-burning power plants turned down. The country has now
decided we are going to clean up carbon dioxide like we clean
up other types of air pollution."
Industry officials reacted warily to the rule.
Tupper Hull, a spokesman for the Western States Petroleum
Association in Sacramento, said hitting oil refineries and
power plants with fees could end up hitting consumers in the
pocketbook.
"This proposal will raise the cost of producing energy
and fuel for California consumers, and at a time when
consumers have concerns about what they are paying," he
said. "We can't say how much that is, but it is a
significant concern."
Hull also said that if the idea is implemented, and some of
the other 30 air districts in California — or cities or
counties — begin copying it, the state would have a
confusing patchwork of rules just as it is trying to craft a
statewide solution to global warming under a bill signed into
law two years ago by Gov. Arnold Schwarzenegger.
Under the proposal, all 10,000 "stationary
sources" of air pollution that the air district regulates
would be subject to the fee, including businesses and
government agencies. They would pay it annually as part of
getting their overall air quality permit renewed. Small
businesses would pay perhaps $10 or less. Large businesses
that burn lots of fuel and use large amounts of energy would
see costs in the tens of thousands of dollars.
The fee would not affect homeowners or motor vehicles,
officials said.
Of the 10 largest greenhouse gas emitters in the Bay Area,
five are oil refineries in the Martinez-Richmond area, and
four are large power plants in the same area. Only Hanson
Permanente isn't a power plant or oil refinery. The district
has computed rankings on everything from landfills to the
United Airlines maintenance facility at San Francisco
International Airport, the 30th largest Bay Area greenhouse
gas emitter, with 114,427 metric tons of greenhouse gases. It
would have to pay $4,805 under the proposed rule.
Once a carbon fee is in place, critics worry, it could
easily increase. But that's the best way to cut greenhouse
gases, some experts say.
"I think this is tremendously gutsy," said Dan
Kammen, a Harvard-trained physicist who is director of
renewable energy programs at the University of California,
Berkeley.
"Emissions in California are still going up. All the
nice paperwork is not going to make emissions go down until we
put a price on what we don't want — which is greenhouse gas
emissions."
Europe set up a carbon-trading market after its countries
signed the global Kyoto agreement. Under that "cap and
trade" system, companies are limited in the amount of
carbon dioxide they can emit. If they emit less, they can sell
credits to other companies that exceed their limits.
Currently, the market cost is about $40 a ton, Kammen
noted. California is studying creating a similar carbon
market, and all three leading presidential candidates —
Hillary Clinton, Barack Obama and John McCain — have said
they support creating a national mandatory cap-and-trade
program.
Northeastern states also are setting up a similar market
for power plants.
"What the air district is doing is what every
economist knows is coming — but somebody has to go
first," Kammen said.
A majority of climate scientists agree that Earth is
warming because of the build-up in the atmosphere of carbon
dioxide from the burning of fossil fuels, which trap heat. The
10 hottest years on record since the 1880s all have occurred
since 1990, according to the National Climatic Data Center, a
federal agency in North Carolina.
To read the proposed fee rule, go to http://www.baaqmd.gov/pln/ruledev/workshops.htm
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