Cap-And-Trade Costs California Businesses $1 billion

California businesses paid a whopping $1 billion this year buying permits to comply with the state’s cap-and-trade law — the largest sale recorded since the state began regulating carbon dioxide in 2012.

Even with record permit sales, the $1 billion raised was well below market expectations. But environmentalists sold the auction as a huge success, because now oil and gas companies have to buy permits.

“Despite the oil industry’s fear mongering, the sky did not fall,” said Merrian Borgeson, a senior scientist at Natural Resources Defense Council. “California’s carbon market continues to hum along as expected, with this auction’s price right in line with previous auctions.”

Carbon emissions permits for 2015 only sold for $12.21 per metric ton, and permits for 2018 sold for $12.10 per ton. In total, the state sold 73.6 million permits for emissions in 2015 and 10.4 million permits for emissions in 2018.

“We are making progress toward a cleaner future,” Borgeson said. “Our clean energy policies cut dangerous emissions, boost the state’s economy, and drive investment in our most disadvantaged communities.”

But the record permit sales may not be the harbinger of good news that environmentalists and state regulators argue. As of this year, California expanded its cap-and-trade system to cover transportation fuels — meaning oil companies will have to buy carbon credits for the fuel they sell.

Before that, the state’s cap-and-trade law only covered several hundred industrial companies, like food processors, cement makers and other energy-intensive industries. Basically, the state forced more companies to buy permits and expanded the pool of permits — which means prices are lower than they would have been otherwise.

Also, California’s cap-and-trade system has been linked to Quebec’s emissions trading scheme to limit the economic impacts pricing carbon dioxide has on California residents. California officials are trying to convince other states to join their cap-and-trade plan to further disperse costs.

California passed its cap-and-trade law in 2006 under Republican Gov. Arnold Schwarzenegger. The point of the law is to reduce carbon dioxide emissions to 1990 levels by 2030. The law went into full effect in 2012, when the first carbon permit auctions were held.

State regulators are still in the process of implementing a second prong of the 2006 global warming law: a low-carbon fuel standard. This requires oil companies to reduce carbon emission from gasoline 10 percent by 2020 — though the rule is being rewritten in the wake of legal challenges.

But that’s not all. California lawmakers are intent on halving the use of petroleum in the next 15 years. State Democrats have proposed a highly contentious law which would remove 8 billion gallons of fuel from state markets.

The oil industry has come out swinging against the legislation, saying it’s nothing more than an attack on oil companies and jobs.

“Legislative mandates to force reductions in gasoline use are not climate change policies,” Catherine Reheis-Boyd, president of the Western States Petroleum Association, said in a statement. “They are attacks on an important industry in California designed to create conflict and controversy.”

“Achieving so radical a goal in so short a time will require the removal of 8 billion gallons of gasoline and diesel from our fuel supply – with no guarantees that something will be available to replace them,” Reheis-Boyd added.

Originally published by the Daily Caller News Foundation

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California to Spend $20 Million on Part of ‘Hydrogen Highway’

As reported by the L.A. Times:

It’s been more than a decade since former Gov. Arnold Schwarzenegger regularly talked about his dream of building a “hydrogen highway” that would speed fleets of non-polluting cars from Mexico to Canada.

The vision never materialized anywhere other than in the governor’s upbeat, eco-friendly speeches.

Now, finally, a modest form of Schwarzenegger’s highway might actually become a reality.

The California Energy Commission reports that it’s spending $20 million to build nearly half of the approximately 100 stations needed to give a driver of a hydrogen car enough range to travel freely through most parts of the Golden State.

Click here to read the full story

A One-Two Punch Against the Initiative Process at the Supreme Court

An Arizona case before the U.S. Supreme Court that challenges the state’s ballot initiative created redistricting commission could have such an effect on California politics that three former California governors, noted California political scientists, and a California state commission have all filed briefs in the case.

California voters also approved ballot measures that took the power to draw district lines away from the legislature and gave it to an independent commission. Proposition 11 in 2008 created the Commission to draw state legislative districts, Proposition 20 in 2010 allowed the commission to draw congressional districts. If the Arizona legislature were successful in court banning the commission more than the redistricting commissions would fall. Ultimately, the entire initiative process could be endangered.

The Arizona legislature is counting on the court to take Article 1 Section 4 of the United States Constitution at face value, that “the times, places and manner of holding elections for senators and representatives shall be prescribed in each state by the legislature thereof.”

In other words, only the legislature itself can create district lines, lawyers for the legislature claim. Reform movements in the Grand Canyon State and the Golden State rebelled against this authority arguing that legislators have a conflict of interest in setting up legislative districts, rigging the system and drawing districts that often resemble modern art paintings all in an effort to assure sitting legislators re-elections or maintaining the ruling party in power.

The court must decide if legislative power resides only with elected legislators. In the brief filed on behalf of former California governors George Deukmejian, Pete Wilson and Arnold Schwarzenegger, the definition of “legislature” is taken from Samuel Johnson’s famous 1755 dictionary to mean “[t]he power that makes laws.” The brief argues that congressional redistricting can be undertaken “by whatever lawmaking body the people of a State decide to vest with that power.”

The California Citizens Redistricting Commission brief reminds the court that in the state constitution, “All political power is inherent in the people.” Through the initiative process in California and Arizona, “both the people of the state and the elected state representatives are lawmaking bodies, both constitute the “Legislature” for purposes of the Elections Clause.”

Not just the power to redistrict is in jeopardy if the Supreme Court sides with the Arizona legislators say California political scientists at Stanford and UC Irvine in their brief. Other election reforms including California’s open primary and even direct primaries themselves may be in peril.

Take it one step further and a ruling by the Supreme Court striking down the power of initiative to supplant the legislature in redistricting just might open the door for the Supreme Court to consider a challenge to the initiative process itself.

Such a challenge is slowly working its way in the federal courts out of Colorado.

Former Colorado legislators argue in Kerr vs. Hickenlooper that the U.S. Constitution’s clause guaranteeing states a Republican form of government is violated by giving power to the people to make laws, and specifically in the Colorado instance, to vote on tax measures.

Attempting to undercut the initiative process by arguing that measures put on the ballot by the people violates the U. S. Constitution is as old as direct democracy in this country. In 1912, a telephone company in Oregon used the argument to challenge a tax imposed by voters. The court determined then, as it had in previous dealings with the Guarantee Clause going back as early as 1849, that what constitutes a Republican Form of Government is a political question.

Many legal experts thought the Colorado case would be dismissed because the issue was non-justiciable—meaning an issue over which the court cannot exercise its judicial authority. However, the Tenth Circuit Court agreed to allow the case to proceed although the defenders of the initiative are asking the Supreme Court to review that decision.

The way the people of California have chosen to govern themselves will be tested by these Supreme Court rulings dealing first with the Election Clause, and, perhaps, ultimately, the Guarantee Clause of the United States Constitution.

Joel Fox is the editor of Fox & Hounds and President of the Small Business Action Committee

Originally published on Fox and Hounds Daily

Workers’ Comp On The Rise — Again

Sad to read Dan Walter’s item that California once again leads the nation in workers’ compensation costs. It was just a decade ago that the Small Business Action Committee carried the initiative supported by Governor Arnold Schwarzenegger that ultimately brought the warring sides of business and labor to agree to a legislative compromise that brought down the state’s workers’ comp costs.

That measure was adjusted a few years ago under Governor Jerry Brown to insure that injured workers were not deprived of just compensation for on-the-job injuries while still protecting employers’ expenses. Yet, here we are again facing a rising cost that could jeopardize job and economic growth.

The situation is not to the point that it was a decade ago – yet. According to the survey conducted by the Oregon Department of Consumer and Business Affairs, California worker’s comp costs are $3.48 per $100 of payroll. In 2003, the year before the compromise bill was passed, worker’s comp cost $4.81 per $100 of payroll with costs projected to rise to a staggering $6.50 per $100 of payroll by 2006.

The worker’s comp cost burden on business was a huge issue in the recall election that propelled Schwarzenegger into office. It was one of the prime reasons the California Chamber of Commerce chose to end a long-standing policy and endorse in a gubernatorial election, backing Schwarzenegger.

Growing worker’s comp costs brought representatives from other states government business offices flocking to California like vultures in hopes of poaching companies. Full page ads ran in business journals encouraging businesses to relocate, the ads emphasizing lower workers’ compensation costs in those states.

I recall a meeting in the outskirts of the town of Taft in Kern County in a makeshift building that certainly never hosted a political event before stuffed to the rafters with angry business people looking for relief from workers’ compensation costs that were undercutting their businesses.

Are we headed that way again?

The reforms advocated by Governor Brown were intended to get more money to injured workers. But a lot of the workers’ comp funds get sidetracked according to the Workers’ Compensation Action Network, which says that one-third of the money goes to litigation and other costs, not to workers.

Highest in the nation workers’ compensation costs is another measure of why it is so tough to run a business in the Golden State.

Stopping the increased costs must be a concern of the newly elected legislature. If workers’ comp costs climb to a point where they were during the workers’ comp war of ten years ago, another initiative may beckon. With the low turnout in the recent gubernatorial election the amount of signatures needed to qualify an initiative for the ballot has dropped. The necessary signatures to put a workers’ comp reform measure on the ballot would be easier to attain.

This article was originally published on Fox and Hounds Daily