Cap-and-Trade to be Enforced at State and Local Level

December has turned out to be a very good month for the Bilderbergers. The Food Safety bill is about to be signed into law, a bipartisan committee is voting for austerity measures against the people under the pretext of deficit reduction, Obama signed into law the tax package to destroy Social Security, the world's mayors signed a pact (prior to the UN climate change summit in Cancun, Mexico) to tax carbon emissions, California approved the creation of a cap-and-trade system (hoping other states will follow), the FCC adopted 'net neutrality' rules as a justification to seize more power (and to put an end to free and open internet) and, four days before Christmas, the new START Treaty (a nuclear pact with Russia) cleared its last Senate hurdle before ratification.

California Regulators OK Major Greenhouse Gas Rules and Cap-and-Trade Scam

December 21, 2010

AP – Hoping other states will follow suit, California regulators overwhelmingly approved the nation's most extensive system giving owners of power plants, refineries and other major polluters financial incentives to emit fewer greenhouse gases.

The Air Resources Board voted 9-1 Thursday to pass the key piece of California's 2006 climate law — called AB32.

"We're inventing this," said Mary Nichols, chairwoman of the state's air quality board. "There is still going to be quite a bit of action needed before it becomes operational."

Officials said they hope that other states will follow the lead of the world's eighth largest economy. State officials also are discussing plans to link the new system with similar ones under way or being planned in Canada, Europe and Asia.

California is trying to "fill the vacuum created by the failure of Congress to pass any kind of climate or energy legislation for many years now," said Nichols.

A standing-room only board chambers featured testimony from more than 170 witnesses Thursday. Outside the chambers, a few climate change skeptics held signs reading "Global Warming: Science by Homer Simpson."

Some businesses that would fall under the new rules say the system could dampen California's already flagging economy, complicate lawmakers' efforts to close a $28.1 billion revenue shortfall and lead to an increase in the price of electricity.

The rate increases, however, would still need approval from the state.

Gov. Arnold Schwarzenegger told the board he is sensitive to the recession, but argued that many of the new jobs being created under the system are in the clean technology industry.

"The real jobs we're creating right now are green jobs. Since 2006 or so green jobs have been created 10 times faster than in any other sector, so it's also an economic plus," he said.

But he said reducing greenhouse gas pollution is not just about climate change, but about human health and national security.

"I despise the fact that we send $1 billion a year to foreign places for our oil and to places that hate us. We send this money to people that hate us and that are organizing terrorists and trying to blow up our country," he said.

Supporters say the system will help spur economic recovery and innovation, pushing business to invest in clean technologies.

They say the billions of dollars the state collects in the system could help fund clean air programs and help offset any increases in utility rates. Details of the uses of these new funds is still uncertain.

California has already enacted the strictest climate-related regulations in the country involving renewable energy mandates for utilities, tighter fuel-efficiency standards for automobiles and low-carbon fuel standards.

The state's landmark climate law had a Jan. 1, 2011, deadline for devising and enacting the so-called cap-and-trade system.

Here's how it would broadly work:

A company that produces pollution, such as a utility or a refinery, buys a permit from the state that allows it to send a specified amount of carbon dioxide and other greenhouse gases into the air each year.

Those permits could then be bought and sold by the polluters in a marketplace.

If a company in Fresno is 15 percent under its pollution allowance, it can sell the unused portion to a company in Long Beach that has exceeded its quota. The Fresno company gets to keep the money.

Polluters can even make a profit, if the marketplace sets a price above the initial cost of the permit.

The lone dissenting board member, Dr. John Telles, said he had concerns that the new market created by the regulation was too vulnerable to cheating.

"We're potentially vulnerable here to be manipulated," he said. "And I don't see enough safeguards in the design of the market."

The board's staff said it would be working on market issues in the coming year before the launch of the program, but recognized that they were creating something that had not been tried before.

Adding another wrinkle, a company that exceeds its allowance can also buy what are called "offsets." These can be bought by companies with forestry or other projects that reduce greenhouse gases. Those companies can sell those to polluters in the marketplace, also at a profit.

Under the new California rules, regulators would enforce limits on heat-trapping gas emissions beginning in 2012, eventually including 85 percent of the state's worst polluters. The amount of allowed emissions would be reduced over time, and the regulations would expand in 2015 to include refineries and fuel distributors, such as oil companies. The cap would reach its lowest level in 2020, when California wants its greenhouse gas emissions reduced to 1990 levels.

Ninety percent of the allowances would be free in the first years of the program to give industry time to upgrade to cleaner equipment or account for increased future costs as the cap tightens. Over time, as the cap gets lower and fewer allowances are available, costs would rise.

"The idea is to incentivize clean technology over fossil fuels by putting a price on carbon," said Jon Costantino, a senior adviser at a Sacramento law firm who formerly served as the climate change planning manager at the Air Resources Board.

Business groups raised concerns that the board had not yet given hard details about what each facility's allowances would be.

"It's crucial for companies to know what their compliance requirements are going to be far in advance," said Dorothy Rothrock of the California Manufacturers and Technology Association.

"There are definitely going to be some costs incurred right up front for these companies," she said.

State officials say they had to act, because of years of delays in Washington.

"The goal of (the law's) authors in 2006 was to lead by example, and being a leader you have to bring others along with you," Nichols said.

A bill to place a limit on the amount of greenhouse gases nationwide narrowly passed the U.S. House in 2009, died in the Senate because all Republicans and some Democrats from coal- and industry-heavy states balked about how it would raise electricity bills.

Obama, who made the climate bill the centerpiece of his Democratic agenda, pulled support for it after the midterm elections put Republicans in control of the House. The president said he would be looking at other ways to address climate change.

While the Environmental Protection Agency has proposed the first-ever rules to reduce greenhouse gases from large industrial polluters, the GOP, with some support from Democrats, vows in 2011 to block it from moving ahead with the regulations.

California's system, however, could end up being linked to ones being developed in other countries. State officials are talking with the European Union as well as provinces in China and Canada to link systems.

In the U.S., New Mexico narrowly approved its own cap-and-trade program last month and OK'd the state's participation in a regional market. There is another market in the works in the Midwest. Another program exists in the Northeast and Mid-Atlantic states.

Flashback: Beware Santa's Secret Legislation

Originally Published on December 24, 2009

Clarington Fund - It’s no secret this time around, but once again we see the unseemly prospect of a select group of key legislators staying up all night and delaying their Christmas break long enough to muscle-through some controversial legislation before the close of the year. In doing so, they are continuing a grand tradition. December 23 or 24 has been a great time to pass controversial laws, while nobody’s watching too closely. Here are a few examples of legislative skullduggery enacted on December 23 or 24 in history:

• On December 23, 1975: President Ford signed the Metric Conversion Act, still a controversial law, and still widely ignored 34 years later.


• On December 23, 1982: Congress passed an unpopular five-cent-per-gallon Gas Tax increase, on the premise that nobody would notice the nickel, or the secret vote.

While those items might seem trivial and harmless in the rear-view mirror, some of the worst legislation in American history was also hatched on Christmas Eve:

• On December 24, 1827, a group of Congressmen under the control of Andrew Jackson drafted a tariff bill so outrageously protectionist that it was later dubbed “The Tariff of Abominations.” It didn’t pass until the next Spring, but it had the intended outcome of helping Jackson oust John Q. Adams in the 1828 election -- and alienating the South.


• On December 23, 1913, Congress passed the Federal Reserve Act, President Woodrow Wilson’s economic initiative for the creation of a national bank to match those in Europe. President Wilson quietly signed the Federal Reserve into existence on Christmas Eve, while most of the press was on holiday break, ignoring the epochal news.


• And on December 24, 2009, a massive new healthcare bill is likely to pass, one for which the recent head of the Democratic Party, Howard Dean, said that he would NOT vote.

At the New Orleans Investment Conference in October, I had a chance to meet and interview Howard Dean. He seemed like a reasonable, honest, candid man, unlike the media image I’d seen before. That’s why I was not surprised when he wrote last Thursday:

“In Washington, when major bills near final passage, an inside-the-Beltway mentality takes hold. Any bill becomes a victory. Clear thinking is thrown out the window for political calculus. In the heat of battle, decisions are being made that set an irreversible course for how future health reform is done. The result is legislation that has been crafted to get votes, not to reform health care. …I reluctantly conclude that, as it stands, this bill would do more harm than good to the future of America.”

But rather than share a partisan stand on the current sausage of new laws and regulations, I want to use the rest of this column to take a closer look at the mistaken rush to create the Fed in 1913 . . .