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Katy Grimes

The Mystery and Deceit of Cap and Trade and Carbon Trading

Someone recently asked me what Cap and Trade and Carbon Trading is. The simple answer is the State of California is taxing the air we breathe. However, it is also one of the biggest taxing schemes perpetrated on Americans, Californians, and businesses.

The beginning

Carbon trading is actually emissions trading by businesses forced into these “agreements.”

When California’s Global Warming Solutions ActAB 32, was passed in 2006, it was sold to the public as a necessary step to reduce dangerous carbon emissions. California politicians gloated over being the first state to enact such an aggressive policy.

The state’s unemployment rate was very low at the time at only 4.8 percent. It subsequently jumped to 10.6 percent, and in some economically depressed parts of the state, more than 30 percent.

While many California residents seem to have heard about AB 32, the law and its many restrictive, expensive mandates are still a mystery for most, and state officials appear to like it that way.

AB 32 and fraudulent data

AB 32 required the California Air Resources Board to develop new regulations and create “market mechanisms” to reduce California’s greenhouse gas emissions to 1990 levels, by 2020. But government cannot create “market mechanisms” – only the private sector really can, because market mechanisms are supply and demand. When government gets involved, it manipulates naturally created demand.

AB 32 was based on supposed to be based on real climate science that proved that unless dangerous greenhouse gas emissions levels were reduced, the earth’s atmosphere would diminish and we’d all die.

But at the crux of the issue is altered data and science. The data originally produced by Intergovernmental Panel on Climate Change scientists in the 1990’s were altered by government bureaucrats in order to create a crisis, as well as a demand.

Cap and trade carbon auction

In December 2010, the California Air Resources Board created a cap-and-trade program to auction off carbon allowances to California businesses, forcing businesses deemed “polluters” to pay billions of dollars just for the privilege of continuing to do business in California.

The “cap” in cap-and-trade is the legal limit on the quantity of greenhouse gases a business can emit each year, and “trade” means that companies can swap or trade emission permits among each other.

Prior to California developing a cap-and-trade program, one of the most important environmental programs tied to the United Nations Agenda 21, was the U.S. cap-and-trade legislation.

But when the cap-and-trade legislation failed to pass in the U.S. Senate, the Environmental Protection Agency instead took it upon itself to regulate greenhouse gases, ignoring Congress.

The CARB has acted in much the same way, operating autonomously and seemingly without any regulation by the Governor or Legislature.

However, what’s missing from nearly every discussion with CARB is that the key greenhouse gas emission reduction tool of the program is the declining cap, not the auction. The auction is unnecessary.

This is what’s known as a tax on business.

The state’s non-partisan Legislative Analyst’s Office explained: “An allowance auction is not necessary to meet the AB 32 goal of reducing greenhouse gas emissions statewide to 1990 levels by 2020.”

Another Phony California “First”

When CARB first adopted a cap-and-trade program in 2010, it bragged about being the first program of its kind on this scale in the United States. However, there was already one such group in the northeastern United States, the Regional Greenhouse Gas Initiative, which operates similarly.

So, CARB created the Western Climate Initiative, ostensibly “to link its cap and trade system to other states and provinces, such as Quebec.”

But so far, the cap-and-trade program has been a total bust, primarily because CARB is working under a design-as-you-go plan. But don’t count CARB out just yet. They haven’t extracted their pound of economic flesh from the business community yet.

With a manufacturing sector that generates more than $200 billion every year, and employs more than 2 million Californians, according to the California Manufacturers and Technology Association, California businesses cannot afford this unnecessary auction designed to exact social and environmental justice from the business community.

California businesses went along with the AB 32 party for a few years because they thought they had to.

‘Linking’ with Québec

The original plan was to create a giant climate change coalition with other states and provinces from which carbon trading and taxing would emanate. But one by one, states have dropped out, citing the difficult economy and cost to manage such a program.

But not California. We “linked” with Québec for carbon auctions. Québec, a province, not a country, is not even a trading partner with the United States. However, Since 2006, Quebec created a “green plan” in order to achieve the objective of the Kyoto protocol on climate change. 

Yet, the California Air Resources Board just announced the first joint cap-and-trade carbon credits auction between California and Québec has been postponed due to “technical difficulties,” as I reported last week.

And it is important to note that the California-Québec relationship is not trading apples-to-apples. Québec gets 97 percent of its energy from hydroelectric sources. California is trying to reduce traditional electricity production, including hydroelectric power, and instead replace it with as much “renewable” energy as possible from wind and solar, algae and ethanol. Energy experts have repeatedly said that California’s energy demand is too much for the alternative energy and lower usage standards.

Additionally, Québec has only 80 regulated industries. California regulates more than 300 industries.

CARB recently added to the carbon reduction plan, the goal of 80 percent below 1990 levels by 2050, because California already reached 1992 levels just with technological advances in autos, and the increased use of natural gas.


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