Carbon pricing US style

San Francisco pioneers emissions levy for local businesses

In the first measure of its kind in the USA, companies in California’s Bay Area now face mandatory fees for their carbon emissions. Some 2,500 businesses, ranging from supermarkets to gas stations, oil refineries and power plants, will pay 4.4 cents for every tonne of CO2 they expel. Leading environmental groups, including the Sierra Club and Clean Air Coalition, have lauded the trailblazing levy as a long overdue concrete measure which sets an example for dithering state and federal governments.

For most of the companies affected, the cost will amount only to a nominal, symbolic fee of $1 a year – but the top ten carbon polluters will pay the lion’s share of the estimated $1.1 million the levy will net annually. It’s being implemented from July 1 by the Bay Area Air Quality Management District, which is in charge of regulating local air pollution in seven counties including San Francisco. It already regulates emissions of around a dozen major pollutants including volatile organic compounds, nitrous oxide and soot by about 10,000 companies. Its CO2 regulation plan, approved by its board of directors in a 15-1 vote, will pay for collecting and tracking data on greenhouse gases from business and industry in the Bay Area.

“Someone needs to take a first step, and we’re running out of time when you look at the bay rising three feet by 2100 and the devastating effects of climate change,” San Mateo County supervisor Jerry Hill, the air district’s chairman, told the San Francisco Chronicle. “This is a more expensive proposition if we do nothing.”

Predictably, major polluters, led by the fossil fuel industry, have protested loudly. Climate change is “a big issue that needs a comprehensive statewide plan to address it,” Cathy Reheis-Boyd, chief operating officer for the Western States Petroleum Association told the Associated Press. “We believe it’s premature for local air districts to design local programs before we have a state program.”

California’s state government is actually leading the way towards state regulation of greenhouse gases, approving the landmark California Global Warming Solutions Act in 2006 which sets a target of cutting CO2 emissions to 1990 levels by 2020. But the California Air Resources Board has yet to publish its plans on how this goal will be reached. At federal level, President Bush issued a belated call in April this year for the US to halt the growth of greenhouse emissions by 2025, but proposed no specific mandates or legislative action to make this happen. – Polly Ghazi

24 June 2008

Polly Ghazi