Cap and trade is looking more and more like a tax

February 16, 2018 By Susan Shelley 7 Comments

cap-and-trade-mindscanner-sstockThe veneer that keeps everybody from seeing that the cap-and-trade program is really just a tax is coming unglued.

Mayor Eric Garcetti blasted out an email newsletter happily announcing that the Jordan Downs public housing development in Watts will be refurbished with money from the hidden tax you’re paying for gasoline and electricity.

Watts will receive a $35 million grant of cap-and-trade funds, which Garcetti said will help make “dreams come true” with “improved quality of life, a renewed focus on public health, and better access to affordable housing.”

The city said the work on Jordan Downs will include rebuilding “distressed” units, creating recreational programs, and opening “about 165,000 square feet for retail.”

The funds will also pay for solar panels, a food waste prevention program, and 10 electric buses.

The cap-and-trade money comes from the state’s Greenhouse Gas Reduction Fund, which takes in revenue from the sale of allowances to emit greenhouse gases. The allowances, sold at state auctions, are purchased by companies that generate electricity, refine petroleum, make cement and process food. The prices of those things in California now include the cost of buying these permits to emit greenhouse gases.

Other states don’t do this, but in 2006, to save the planet from global warming, California passed a law to require a reduction in greenhouse gas emissions. Under the mandate now set in current law, greenhouse gas emissions statewide must be 40 percent below 1990 levels by 2030.

To achieve this goal, the California Air Resources Board developed the cap-and-trade program. It puts a statewide limit on GHG emissions, and businesses that are under the law are required to have a permit for each ton of GHG emitted. Every year fewer permits are issued, and the minimum price is a little higher.

The money that’s paid to the state for these permits looks a lot like a tax. But a state appeals court ruled that it’s not a tax, because it’s not compulsory. Any business that doesn’t want to pay it, the court reasoned, could simply go out of business.

Now you know why other states don’t do this.

For California politicians, the cap-and-trade funds are like a gift from heaven. Gov. Jerry Brown is spending them on the bullet train, which is barred by law from being funded with a tax increase. And the Legislature can hand out the rest of the loot to local governments and organizations seeking funding for pet projects.

To help spend the money, lawmakers created a committee called the California Strategic Growth Council and tasked it with advancing the revitalization of local communities. The SGC oversees the Transformative Climate Communities program, which considers grant applications from community groups, like the Watts Rising Collaborative, an advocacy organization made up largely of departments of the city government.

So your city tax dollars are being spent to lobby for cap-and-trade funds that come from the extra money you’re paying for electricity, gasoline and anything that’s made or moved in California.

Some of the $35 million grant for Watts will be spent to connect residents with new jobs created by TCC projects, and in a hint of how the spending will work out in practice, the funds will also be used for a “displacement avoidance plan” which will provide resources to “educate residents about their housing rights.” In other words, gentrification.

But nobody’s admitting that. It’s all under the banner of fighting climate change.

The president and CEO of the Housing Authority of the city of Los Angeles, Douglas Guthrie, said the Housing Authority is “proud to be leading this transformational initiative to build a healthier Watts” with “greenhouse gas reduction strategies.”

It’s just a tax. All of California accounts for only 1 percent of worldwide greenhouse gas emissions, so cutting emissions to 40 percent below 1990 levels is an exercise in futility, if what you’re really worried about is climate change.

Politicians are not really worried about climate change.

The cap-and-trade program is turning into a tax for community redevelopment and for a plain old slush fund. It doesn’t help Earth’s climate, but it does real damage to California’s business climate. Cap-and-trade is a hidden tax on energy that is making everything in California more expensive than in other states.

The biggest challenge for regulators is to prevent the prices of the allowances from going up too sharply. It might bring the game to a crashing end if people noticed the economic damage they’re enduring. When the voters put two and two together, things can heat up fast.

 Columnist and member of the editorial board of the Southern California News Group, and the author of the book, “How Trump Won.”

This article was originally published by Fox and Hounds Daily

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California Fights Greenhouse Gas – Farting Cows – by Driving Dairies Out

December 2, 2016 By Chriss W. Street 12 Comments

cowsThirty percent of California dairies have closed and hundreds of thousands of milk cows have been slaughtered over the last decade. Meanwhile, California liberals are crediting themselves for reducing greenhouse gas emissions from farting cows.

When California’s Democrat-controlled legislature passed the California Global Warming Solutions Act of 2006, known as AB 32, few understood that the action was a financial attack on Republican rural agricultural communities that over the next decade would see 600 dairies forced to shut down.

Despite the higher energy costs for farming, processing, and transportation to comply with AB 32, California’s remaining 1,400 dairy families and their 1.74 million milk cows are still ranked first in the U.S. for milk, butter, ice cream, nonfat dry milk, and whey protein concentrate production, plus second in cheese production. With $9.3 billion of sales, about 20 percent of America’s total, the California dairy industry is the state’s largest agricultural activity, accounting for 2 percent of the state’s economy.

But in the “Fake News” parroted by the media in the run-up to the elections, Sacramento Democrats claimed they needed to pass radical legislation in September to combat the “14.5 percent human-induced greenhouse gas emissions” that a United Nations 2013 report claims is produced by livestock, “with modern beef and dairy production accounting for the bulk of it.”

The “Mitigation of Greenhouse Gas Emissions in Livestock Production” report produced by the Food and Agriculture Organization of the U.N. in November 2013 states that enteric (intestines) produced methane (CH4) emissions from livestock may contribute 7 percent of worldwide greenhouse gasses. The report also praised the modern dairy activities seen in California as environmentally friendly, since “grain-fed beef has a lower environmental footprint than grass-fed beef systems,” and the “largest GHG emissions in a beef production system (about 80 percent of the total) occur in the cow-calf phase, when cows and their calves are consuming predominantly forage-based diets.”

In spite of the fact that in California dairy farmers exclusively feed their dairy cattle grain and only utilize mature females, Democrats and one Republican voted to pass SB 1383, which requires a 40 percent in livestock greenhouse gases below their 2013 levels by 2030. It also allows the Air Resources Board to regulate cow flatulence, if a practical technology exists to reduce it.

Although Gov. Brown said, “This bill curbs these dangerous pollutants and thereby protects public health and slows climate change,” two complex crony amendments were taken in the final hours that effectively barred the National Federation of Independent Business and  small farmers from understanding the impacts of the changes to the bill and having a chance to voice their strong opposition.

The real goal of the legislation was to fund another wildly subsidized sustainable energy boondoggle, with $90 million in grants from the state’s cap-and-trade revenues that will likely fund investments by large corporate farmers in dairy digesters and waste disposal corporations for composters. Both will use methane from manure to generate energy sold to electrical utilities at super-premium prices.

Dairy farmers say the new regulations will drive up costs when they are already struggling with five years of drought, low milk prices, and rising labor costs. They are also concerned about a newly-signed law that will boost overtime pay for farmworkers.

Director of environmental services for Western United Dairymen Paul Sousa was quoted by the San Francisco Chronicle: “It just makes it more challenging. We’re continuing to lose dairies. Dairies are moving out of state to places where these costs don’t exist.” He said he expects more “complete dispersal” auctions to close dairies and slaughter their mature herds.

This piece was originally published by Breitbart.com/California

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CARB Threatens Greenhouse Gas Law Extention

July 15, 2016 By Joel Fox 4 Comments

carbon-tax-1The California Air Resources Board set a match to controversy this week suggesting that the board could push the cap-and-trade deadline for funding greenhouse gas reduction programs past its 2020 end date by executive fiat.

That’s not the way the law works, many Republicans cried, and they are backed up by an opinion from the Legislative Counsel’s Office.

According to the opinion, “The act does not authorize the governor or the ARB to establish a greenhouse gas emissions that is below 1990 level and that would be applicable after 2020.”

Republican Senate Minority Leader Jean Fuller called the ARB proposal “illegal” and admonished the executive branch, “Californians deserve better than a government that acts as if they are above the law.”

Many in the business community feel fixes are needed to the current program before any extension is contemplated. Dorothy Rothrock, president of the California Manufacturers and Technology Association said in a release following the ARB announcement, “Manufacturing investments and jobs have lagged other states in the US over the past six years by a large margin. Future climate policies must recognize this reality and be designed to protect California’s manufacturing jobs and economy.”

The cap-and-trade policy ARB wants to extend is subject to court action already, as business interests, including the California Chamber of Commerce, brought suit claiming the cap-and-trade formula is actually a tax requiring a two-thirds vote of the legislature. The law establishing cap-and-trade, AB 32 of 2006, was established by majority vote. While a lower court brushed aside the business complaint an appellate court is now considering the matter. Observers watching court action say there is a chance the lower court decision could be reversed.

There is another way for the legislature and the governor to extend the cap-and-trade end date and lower the greenhouse gases goal below 1990 levels. Pass legislation.

That is exactly what some in the legislature are trying to do with SB 32, that would extend the law lowering the acceptable greenhouse gas level 40% below 1990 levels by 2030.

The court case, however, raises doubt about whether the SB 32 needs a simple majority vote or a two-thirds vote.

In a Flash Report column yesterday, state Senator Andy Vidak said attempts are being made by Democratic leaders in the legislature to secure enough Republican votes to allow SB 32 to pass by two-thirds. If true, that is a strong indication that the Democrats are concerned the court will side with the CalChamber over the tax issue and brand cap-and-trade an illegal tax.

Yet, the politics over changing the greenhouse gases law do not stop there. Another consideration is one posed by L.A. Times columnist George Skelton who suggested California voters in November, reacting negatively to a Trump candidacy, might defeat Republican officeholders thus securing a two-thirds vote in both houses of the legislature for the Democrats.

In that case, the strategy for the Democrats just might be to bide their time. Then again, you might conclude that the politics don’t stop at that point, even with a two-thirds Democratic majority, because the politics of energy and its cost have split the Democratic caucus in the past and could do so again.

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

This piece was originally published by Fox and Hounds Daily

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CA Cap-and-Trade Credits Extend to Brazil

May 13, 2016 By Chris Reed 3 Comments

carbon-tax-1In late 2012, as officials with the California Air Resources Board were refining rules for the state’s nascent cap-and-trade pollution rights program, a huge scandal was unfolding in the European Union. Five Deutsche Bank AG officials were arrested for their role in a complex scam involving using the sale of carbon-emission certificates to avoid paying taxes. Earlier that year, six cap-and-traders involved with the bank had been arrested as well.

Cap-and-trade critics had always warned that as soon as programs were introduced, there would be aggressive efforts to game and/or cheat the rules to make money. With these warnings reinforced by the EU scandal, California officials in early 2013 said they’d learned their lesson. Greenbiz.com reported that …

California, with the advantage of advanced warning, has taken the EU market’s lessons to heart. It has recognized the crucial need to tightly control — and extensively oversee — who can participate in the carbon market and how. With the help of the state Attorney General’s office, California has adopted more stringent rules than the EU ETS [Emissions Trading Scheme].

State tax credits for payments to indigenous communities?

Now, however, the Brown administration is pondering relaxing these rules by allowing companies to get pollution credits by paying for preservation of forest lands in Brazil.

The idea has been discussed for years but has picked up momentum of late. According to recent reports, state regulators are closer than ever to formally expanding the cap-and-trade program by allowing polluting industries to offset their carbon emissions by paying indigenous communities in the Amazon to preserve the rain forests in their region.

This idea has won praise from environmental groups, who have long depicted preservation of the rain forests in the Amazon delta as a global priority. They call it a great way for Brown to burnish his environmental legacy.

The Western States Petroleum Association has also been supportive, saying industries need options to meet their commitments under AB32 and related laws.

Brazil’s huge corruption scandal bodes poorly for CA program

But the initial coverage of Brown’s trial balloon omitted mention of two key issues: Gaming and cheating of cap-and-trade programs remains a huge problem around the world, and Brazil has both a long history of corruption and a lack of transparency.

In early 2015, Foreign Policy magazine reported how the European Union’s program had become a “playground for gangsters, international crime syndicates, and even two-bit crooks — who stole hundreds of millions of dollars in pollution credits.”

In October, Forbes magazine reported on a slew of new scandals, starting with schemers in Russia and Ukraine being accused of using the EU cap-and-trade market to sells counterfeit credits for 600 million tons worth of carbon dioxide emissions. The account noted that the less sophisticated a nation’s law-enforcement system, the more likely cap-and-trade scams were to be — and that some of the world’s richest people and companies were taking advantage.

“The cap-and-trade system of emissions trading is very difficult to control and its effects are diluted. … It is precisely because I am a market practitioner that I know the flaws in the system,” Forbes quoted financier-investor George Soros as saying.

Meanwhile, in January, Transparency International reported that over the previous year, Brazil’s corruption problems were growing worse at a faster rate than in any nation on the planet. Agence France Presse reported last week that a scandal involving billions of dollars of missing revenue from state oil giant Petrobras continued to grow, with dozens of government and business leaders implicated.

Efforts to remove President Dilma Rousseff from office have been complicated by the fact it is hard to find many credible critics of Rousseff within the Brazilian government, given how many prominent Brazilian politicians are either directly tied to the scandal or indirectly tied through close political alliances.

According to CalMatters, state air board officials said they would look to avoid problems caused by Western nations’ cap-and-trade programs in another tropical nation: Nigeria. But the issues there involved indigenous communities being denied use of forest lands they relied on because of restrictions under new conservation agreements — not necessarily the problems that California could risk if it counts on Brazil as a partner in a cap-and-trade pact.

This piece was originally published by CalWatchdog.com

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Gov. Brown’s Greenhouse-Gas Cuts Scrutinized

April 22, 2016 By Jonathan J. Cooper 1 Comment

As reported by the Associated Press:

SACRAMENTO, Calif. (AP) — The top lawyer for the California Legislature says Gov. Jerry Brown exceeded his authority when he issued an executive order imposing what he called the most aggressive carbon-emission reductions in North America, aligning California with the European Union’s aggressive climate change standards.

The opinion by Legislative Counsel Diane Boyer-Vine does not curtail Brown’s authority to continue implementing the greenhouse gas reduction plan, but it suggests a lawsuit challenging them could be successful.

The Democratic governor issued the executive order last year setting a new target for cutting carbon emissions to 40 percent below 1990 levels by 2030. …

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