On Wednesday the Bay Area Air Quality Management District board of directors voted 15–1 to charge companies 4.4 cents per ton of carbon emitted. Set to go into effect on July 1^st for the nine Bay Area counties, the carbon tax will be the first of it’s kind in the country.

Proponents admit that such a modest fee probably won’t create huge inflows of cash for local governments or force emitters to make significant reduction in emissions, but it “sends the right message”.

To Tax or To Cap

"It doesn't solve global warming” admits Daniel Kammen, a renewable energy expert at the University of California, Berkeley, “but it gets us thinking in the right terms. It's not enough of a cost to change behavior, but it tells us where things are headed. You have to think not just in financial terms, but in carbon terms."

Not surprisingly, not everyone is amused with the new carbon tax, complaining that the tax could interfere with the state’s efforts to curb global warming through the Global Warming Solutions Act signed into law by Governor Schwarzenegger in 2006.

Cathy Reheis-Boyd, chief operating officer for the Western States Petroleum Association, said that climate change is "a big issue that needs a comprehensive statewide plan to address it. We believe it's premature for local air districts to design local programs before we have a state program."

More than 2,500 companies will be required to pay the proposed tax, expected to generate $1.1 million the first year to help pay for programs to measure CO² emissions in the region and develop ways to reduce them. Most of those 2,500 companies will end up paying less than a dollar a year, according to estimates, while a handful of power plants and oil refineries will end up paying about $50,000 per year or more.

A means to “internalize” up-front the true cost of carbon emissions, many economists say that a carbon tax is a more efficient – and possibly more effective – means of regulating carbon emissions than a cap-and-trade system.

Cap-and-trade or carbon tax? Anyone wish to take that bait?

Sources and Further Reading
The Daily Green
Los Angeles Times

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