REFILE-UPDATE 3-California unveils greenhouse gas trading plan

Fri Oct 29, 2010 11:31pm GMT

"California is the biggest icebreaker there is, and if that ship stops moving it will have a huge effect on everyone else," said former state climate change planner Jon Costantino, a lawyer at Manatt, Phelps & Phillips, who said passage of the rule, rather than its details, was the key for alternative energy clients.

A group of manufacturers, farmers, petroleum companies and others who have been critical of plans, said the new draft better reflected the reality of the weak economy.

"It also provides a gradual approach in the early years that will allow California businesses the time needed to meet the 2020 goals," said Shelly Sullivan, executive director of the AB 32 Implementation Group.

The state's 2006 law, AB 32, requires it to return to 1990 levels of greenhouse gas emissions by 2020, and the hobbled economy has produced fewer greenhouse gas emissions than expected, making the goal less onerous.

The state agency planning cap-and-trade has responded in part by ignoring a suggestion by a panel of economists last year to auction off the emissions permits.

Under the plan unveiled on Friday and likely to be adopted Dec. 16 by the powerful Air Resources Board, the brunt of the market force will not be brought to bear for years.

Planners say that by setting clear limits and clear rules for the scheme, it hits a compromise that will allow polluters flexibility to act, investors certainty, and improve the environment without causing economic disruption.

Polluters will be given on average about 97 or 98 percent of the permits they will require in the first year.


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