Large business group challenges cap-and-trade program

The lawsuit will not stop Wednesday's auction. The Chamber of Commerce isn't even asking that it do that, but what they do want to do is stop the current program because they claim it will put an undue burden on California businesses.

When Gov. Arnold Schwarzenegger signed his global warming bill back in September of 2006, he set into place a system of charging companies for the amount of carbon they put into the atmosphere.

In order to keep those companies from fleeing to other states, the California Air Resources Board adopted a plan to slowly phase in the carbon caps. Companies like Clif Bar in Emeryville are celebrating, hoping to take advantage of that by installing solar panels on their rooftops.

"This solar array provides 70 percent of our electricity and heat and saves us $145,000 annually on our electric bills," said Cassie Cyphers from Clif Bar.

Clif Bar will be able to sell the carbon credits it receives from these panels to companies that exceed the amount of carbon the state allows them to put into the atmosphere.

"Well, we hear a lot of concern, Mark," said Gino DiCaro, a spokesman for the California Manufacturers and Technology Association.

He says companies are going to have to pay more to meet the carbon limits and ultimately those costs will be passed onto consumers and will cost jobs.

"There's a distinction between a good cap-and-trade program that helps California reduce its emissions at a minimal cost and an auction that's designed to extract billions of dollars from industry and our highest wage employers in California and that's simply what CARB has done," said DiCaro.

But at UC Berkeley's energy institute, energy expert professor Severin Borenstein, Ph.D., says that's just not accurate. He said, "Consumers are probably going to see almost nothing in the next year."

Borenstein says big energy users like utilities, oil companies, cement manufacturers -- all have been given permits by the state to cover most of the carbon they produce. Those carbon caps will be reduced over the years, but Borenstein says there is a built in incentive to improve.

"Because if you figure out a way to make that cement, while emitting fewer greenhouse gasses you get to keep the permits and that means you can sell them and make money," said Borenstein.

We asked the big oil refineries in Bay Area to weigh in on this issue. Chevron is the only one that responded and it said only that it's going to participate in the cap-and-trade program, as it's required to do.

There is a provision in the regulations that requires refiners to pass on the cost to drivers; eventually that takes effect in 2015. And if carbon projections hold, it could raise the price of a gallon of gasoline by 15 cents.

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