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Does Cap and Trade cost jobs?
#1
Posted 10 November 2012 - 12:56 AM
Today, I received a petition to end California's Cap and Trade program. The petition claims that Cap and Trade will cost California businesses $1 billion a year. Then, it went on to say that Cap and Trade is a job killer.
I don't necessarily buy the $1 billion a year claim. I am sure there are fees for being in the program. There may be some costs to businesses but as they come into compliance with our new emissions laws, those costs should lessen. I have a vague idea of how Cap and Trade works, but I would think for those businesses who pollute less their would be rewards.
But, I really don't understand how Cap and Trade kills jobs. Does anyone have an idea? I couldn't find who was putting up the petition. I'm sure it's some right wing group trying to scare people. The formula being if anything costs a business money, then they will have to lay off people. That's all I can come up with. I just don't see why the practice will threaten jobs. It might even create jobs, right?
#2
Posted 10 November 2012 - 03:24 AM
But the cost of not doing something?
Billions+. Health issues, rebuilding after storms, losing crops and cattle to droughts, homes and whole
neighborhoods being washed down river from floods....
They don't want to pony up the funds to make our air cleaner (and cooler) so they fall back to their
only know strategy; lie and confuse.
If "they're" so concerned about American jobs, why do "they" allow jobs to be shipped overseas via
a tax code that rewards companies with tax breaks rather than keeping the jobs here?
And people like murray-firing coal miners one day after Obama got re-elected because he was ticked off?
http://www.altenergy...corp-fires-160/
It may not end up being cap and trade but we have to have some sort of carbon tax and end subsides
to the dirty fossil fuel industries.
Perhaps command and control?
http://en.wikipedia....rsus_carbon_tax
#3
Posted 10 November 2012 - 07:56 PM
I found this one particularly deception. California's Cap and Trade program will only affect a small number of large corporations to start with. These are multi-million and billion dollar corporations. The idea that somehow if they must pay for this program (a hundred thousand, a million dollars?) that it will hurt them so much they will have to lay people off seem ludicrous.
The coal companies are scared to death because the EPA is going to release new regulations at the beginning of the year. So naturally, they must have a tantrum now. In reality, it will probably shave very little off their profits. When has Obama ever said he is getting rid of coal production? Mostly, I hear him speak about "clean" coal.
#4
Posted 11 November 2012 - 07:30 AM
As with all legislation there will always be many different viewpoints. Likewise there will be winners and losers on business bottom line. Because we are active in the California market, we have been very interested in understanding California’s Cap and Trade Programs. One of the interesting informational sessions we have attended was a webinar put on by ReynoldsCenter.
It effectively talks about a lot of the issues that will be faced by California and gives a set of factors to watch over the next months and years. Here is a link to the webinar, you can just watch it, it was recorded. Just cut and paste it in your browser. Also you will need adobe presenter, which if you do not have can be downloaded for free. It is a great resource because it allows you to attend lots of online webinars for business, government or educational forums.
https://connect.asu....e&pbMode=normal
Or http://businessjourn...uided-training/
click on the Sessions recording- California’s Cap and Trade Law- What You Need to Know, this will lead you to the webinar.
One of the issues identified by the webinar was the three largest carbon intensive, energy use sectors are primary metals, paper manufactures and textile mills, and these are the most energy intensive users. California does not have many of these types of firms as opposed to Ohio for example, meaning that the affect on jobs would be higher in these areas in Ohio, not California.
Now is it possible some consumers electrical cost will rise, the short answer is yes, maybe but it is also important to point out that for some consumers the cost of electricity may go down. The reason is that by producing energy from alternative sources, the basic cost for production is lower, because of the ability to not have to buy oil, natural gas and coal. Likewise because these companies will have carbon credits to sell, they will have additional revenues to lower their costs.
One of the examples given during the webinar is the past success with the Sulfur Dioxide cap instituted during the first President Bush’s administration. Electrical utilities found very cost effective ways to limit these emissions and were able to increase revenues while limiting these emissions. This success is one of the factors that economist point to in the past as being able to influence emission standards without having a negative effect on consumers and business.
Let’s face it; anytime you talk legislation, the first thing many in the business community will say is that it will increase costs. This knee jerk reaction is not always true and for big polluters the cost of business may go up, yet if they
decrease that pollution the benefits will be decreased costs from paying out fines, judgments and litigation from both government and private individuals.
Likewise by reducing pollution they will often become more efficient and that translates to more income over the long term.
Personally I believe that the cap and trade will allow companies to transition to alternative energy sources faster and provide the ability to bring down costs significantly over time, especially when you consider the increases in fuel costs that will occur over time. I also feel that with the incentives that are available to utilities from federal and state sources, converting over to renewable will be much more appealing with Cap and Trade in place.
Now will everyone win, no. But with that said, in a competitive capitalistic economy like here in the United States, changing factors in business mean that there will always be losers, as long as there is adequate competition, consumers usually are the winners.
I hope this will help you.
Jeff for E3Wise
#5
Posted 11 November 2012 - 11:26 AM
Also, thanks for your thoughtful response. There are many factors to consider when something like this is put into place, especially when it is new. Often, it's easier to cry that the sky is falling, then to wait to see what actually happens when the program is put into place. We will know soon enough since phase one starts this week.
Cap and Trade to me seems like a transitory program. Perhaps some day we won't even need it as alternatives become cheaper and easier to come by. As you said, one goal would be to make alternatives more appealing. At some point, would it be cheaper for a company to fix what they need to fix on their plant than to buy credits? The balance between fines and costs of making changes would have to be considered also.
I think of the Richmond refinery fire this year and the missteps that Chevron made are a good example of how businesses gamble.. They are going to be hit with hundreds of millions of dollars in fines. First, they circumvented the system designed to monitor air quality around the refinery. It would have detected the first sign of trouble and it would have helped the city leaders know what to expect with medical problems. Second, they did not repair a corroded pipe they identified the year before which ultimately ruptured. I always look at these things and wonder how much it really would have cost if the business had done things right in the first place. I know they do these cost assessments and a lot of times they figure they'll hedge their bets.
Cap and Trade only affects a small group of businesses to begin with. If the sky doesn't fall after this phase is in place, then maybe other states will adopt Cap and Trade or a similar program.
#6
Posted 11 November 2012 - 12:10 PM

#7
Posted 12 November 2012 - 12:04 AM
Phase one was in 2008. This included the auctioning off of permits. Phase two was this year. This involved industries having to meet certain CO2 emission levels.
I wonder if they went ahead with this. I know some of those states switched into Republican hands in 2010, so it makes me wonder if this is one of the things they blocked.
Here's an article on it written in 2008:
http://www.reuters.c...E48O91C20080925
#8
Posted 12 November 2012 - 12:21 PM
The US could raise millions-billions (maybe) and the air will be cleaner and cooler.
It's a win/win, imo.
#9
Posted 12 November 2012 - 11:44 PM
#10
Posted 13 November 2012 - 03:02 AM
Fired up, ready to go was Obama's theme, and because of the staggering wins from so many Democrats, the
wind has changed.
Maybe the republicans are noticing, maybe not.
But with Sandy still fresh on our minds, the "bought and paid for" coal miners standing behind mitt, the news
that murray coal fired so many miners after his side lost the election; people are seeing the hard right as sore
losers and the possibility of new jobs in the clean energy sector.
With the fiscal cliff on everyone's mind too, and everyone knowing how bad it could be, it's a possibility.
I'm back to 80% optimistic again.
Before the election, I was down to 30%.

#11
Posted 14 November 2012 - 02:20 PM
This article gave me some optimism on how Cap and Trade will make some within the green sector winners:
http://www.siliconva...-news-cleantech
Most of what I've heard up to this point is who will be hurt by Cap and Trade. Mostly that comes from the Chamber of Commerce and the Oil Industry which I guess isn't making enough profit. The Chamber filed a last minute lawsuits against the state over this issue claiming it's unconstitutional.
There are many business that will be winners. There are several positives for the state as well.
First, many Clean Tech businesses and investors have already been experiencing a mini-boom. The idea that businesses will be needing certain technologies has sparked innovation throughout the state.
Second, as some businesses stand to pay fees, others stand to make money. The business who make components for reducing emissions have seen an increase in sales and interest in their industries. There are software companies who make programs that monitor daily emissions, calculate reductions, and so forth. Their services are needed now. There are the businesses who will earn rebates for meeting and exceeding the goals.
This quote sums it up:
"Frank says AB 32, the state's global warming law that laid the framework for cap-and-trade, has helped drive innovation in California, evidenced by the rise in cleantech patents and venture capital investment."
Cap and Trade is sparking innovation. That's a good thing for everyone. If these industries start booming, that's more money in the economy and more jobs.
Third, the article states that some businesses have decided to make changes prior to the auction. I think that gives me the most hope. Many of these first bidders are billion dollar corporations. They could easily write off the cost of their emissions permits. Instead, some are already working to reduce emissions. As the emission standards will become tougher each year, it behooves them to make necessary changes.
Fourth, those who buy too many permits and reduce their emissions will be able to sell them to other companies. So, there is a little monetary incentive for some.
From the different stuff I've read, it looks like all eyes are on California. If this goes well, clean tech companies in other states are eager to push the issue in their states.
This editorial has a few more details not in the original article. 600 companies will be involved in the first auction. They include oil refineries, power plants, and cement companies. (I would not have thought of cement companies as big polluters, but I guess they are.)
It also says that any revenue made through the Cap and Trade program must be put into energy reductions at public buildings. So, this won't necessarily increase our budget. However, it's going to allow California to make public buildings green. This means more people working which is a plus for the economy as a whole.
I think it's far too easy to think only of the immediate costs and the negatives. But, the more I read the more I see that this can be a real boost to a state's economy. Is it the ultimate solution to emissions? Probably not, but it is a good start.
http://www.insidebay...tion-is-turning
#12
Posted 15 November 2012 - 03:34 AM
And yes, a good start.

#13
Posted 15 November 2012 - 11:08 AM

I thought I would update folks as the first auction was yesterday. This article spells out what happened. And, no, the sky did not fall. :D
http://www.insidebay...sidebayarea.com
First, a little history. This auction took 6 years of planning. In 2006, Republican Governor Schwarzennegger and the Democratic leadership in California's state legislature worked together to pass the new state emissions standards. There were many lawsuits against this based on whether states should have the right to set standards. In the end, the state won. Cap and Trade is only one part of the new standards.
There was a lawsuit filed on Tuesday by some business groups. I am assuming they hoped their would be an injunction to stop the first auction, but that didn't happen. This lawsuit states that this is a tax and the state can't just invoke a tax. The state and environmental groups offer that it is a fee for services/merchandise and that businesses have a choice. They can buy credits or they can upgrade.
There will be 4 auctions a year. 600+ companies are affected by the new emissions standards. It's hard me to wrap my brain around this number. In order to be included in Cap and Trade, your business is emitting 25,000 metric tons of carbon dioxide or greenhouse gasses.
When the doors opened, there was no mad rush. This doesn't mean that it wasn't successful. They haven't put out official statistics yet. Since everything was done via computer it probably did not take as long as if it was person to person. Also, businesses are refusing to comment on whether they participated or not. The articles states this is a "marketing strategy". Okay... They also suggest some businesses already implemented the necessary changes so that they wouldn't have to buy credits. It will be interesting to see which business fall into what category.
Now, before everyone worries about the cost to business, you should know something. The state subsidized 90% of credits bought by each business. So, they only had to pay 10% of the cost. This is to encourage them to participate. The state will continue to subsidize these credits, but each year the subsidy will be lowered until the state won't pay any percentage of the cost. It is hoped by that time the businesses will have adapted new technologies so they are well within the emissions cap.
If this is successful, it will be the second largest Cap and Trade market in the world. The Euro Zone has the largest. It looks like Washington and Oregon are keeping a close eye on what happens as they are considering something similar.
#14
Posted 15 November 2012 - 11:54 AM
#15
Posted 15 November 2012 - 01:51 PM
I have a feeling there will be several lawsuits over the carbon tax if it is done at the state level. I'm not sure how the laws are in other states. In California, taxes are a tricky subject. I know that they cannot be increased without a vote by voters. I'm not sure about an all new tax if that must be put before the voters as well. I think the anti-tax sentiment may be stronger in other states.
#16
Posted 16 November 2012 - 11:26 AM
So; The whole idea is to prevent tipping points from being crossed in nature by human caused greenhouse gas pollution effects, and time is running out fast.
Which means, in realistic terms, that time WILL run out. Too bad.
#17
Posted 18 November 2012 - 03:53 AM
http://www.env.gov.b...ing-regulation/
And a good site about carbon tax.
http://www.carbontax.org/
#18
Posted 18 November 2012 - 12:05 PM
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