AB 32 Cap-And-Trade Auction Tax

An auction tax is one of the proposed methods for allocating permits to California companies and public agencies subject to the AB 32 cap-and-trade program under preparation by the California Air Resources Board.

Thomas Tanton, Principal of T2 & Associates and Senior Fellow with Pacific Research Institute (Cal Watchdog’s parent institute), was hired by the AB 32 Implementation Group to undertake an analysis of the economic impacts of an AB 32 cap-and trade auction tax on California.

In an auction system for allocating Greenhouse Gas (GHG) permits, CARB would hold an auction between cap-and-trade participants to determine the price of emission permits.  Entities would then have to purchase permits equal to every ton of GHG emissions they generate.  In practice, these auction costs on companies and agencies would function much like a direct tax because, in order to operate, they would be required to purchase these permits.

Tanton offers a few examples of what individual companies and public agencies would have to pay under a cap-and-trade program using 100% auctions at a price of $60 per ton:

  • A California winery would pay $2.6 million a year for these AB 32 Auction Taxes or more than $26 million over ten years.
  • The Los Angeles Department of Water and Power would pay $246 million a year for its electricity generation facilities in California alone.
  • UCLA would pay nearly $11 million a year in AB 32 auction taxes.

Tanton explained the impact of the economic impact of AB 32 includes, but is not limited to:

An annual effective cost increase to the typical family of four to be $818 the first year growing to $2800 in 2020, if market clearing prices for permits are $60 dollars per ton. Those figures are $270 and $930 if permit prices are at $20 and as much as $2720 to over $9330 per family if prices clear at $200 per ton. Costs increase for most goods and services. These cost increases are average for the population, although some residents may be compensated through a partial return of auction revenues.


Annual job losses to the California Economy of 76,000 to 107,000 the first year growing to perhaps 485,000 jobs in 2020, assuming a market clearing price of $60 per ton. These are net jobs losses, accounting for lost jobs and for jobs created by redirecting revenues collected from the auctions.

Lost economic activity of nearly 2% of gross state product, or about $250 to 350 billion over ten years. Much of this derives from reductions in productivity across the economy, and negative trade implications due to reduced competitiveness.

The intended and unintended consequences from AB 32 are going to be staggering and far reaching. No business, family or individual will be untouched, and most will crumble under the impossible regulations and costs.

Review Study documents here.

Read the Poll here.

for all information about AB 32: http://www.ab32ig.com/


Katy Grimes

11 comments

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  1. EastBayLarry
    EastBayLarry 22 March, 2010, 19:57

    Very interesting.

    It looks like AB32 really will have a positive effect on GHG by so sompletely stiffling all activity in the state that the only residents left will be huddled around home-made candles wondering what ever became of the great state of Califotnia.

    Can we still use horses or are horse farts going to be taxed too?

    Reply this comment
  2. TheTruthSquad
    TheTruthSquad 23 March, 2010, 07:37

    Now CalWatchbog is rewriting press releases of industry propaganda?

    This “study” was paid for by Valero oil, which is spending millions of dollars from its Texas oil company profits to get on the California ballot instead of complying to our state’s clean air laws.

    Here’s the truth — if you are interested.

    http://www.facebook.com/notes/no-on-valero/fyi-connect-the-dots-valero-and-cmta/377061906159

    Reply this comment
  3. Katy Grimes
    Katy Grimes 23 March, 2010, 08:59

    Truth Squad – if the information looks familiar it’s because I actually got it from Tom Tanton.

    Reply this comment
  4. EastBayLarry
    EastBayLarry 23 March, 2010, 09:44

    Imagine the ‘truthsquad’ citing a Facebook post as ‘reliable’.

    Reply this comment
  5. Nico
    Nico 11 April, 2010, 09:58

    Valero is an American Company, only international companies, such as and chevron will be able to dominate in this 4th world system. The bankers want squalor so you are dependent on them, they want complete control and to eliminate billions of lives for “population control,” this regulation will bring despotism at it’s worst and no real environmental changes will occur. Only ones that benefit the financial industry.

    Reply this comment
  6. Tyler
    Tyler 16 April, 2010, 14:13

    Truthsquad is a complete joke. Completely uninformed about every issue they try to talk about and they just repeat all of the garbage spewed out by Mary and Arnold. I would be willing to bet that “Truthsquad” is some hack CARB employee that gets paid 6 figures of our tax money to comment on every story about CARB. Since the only positive news about CARB comes from CARB, they needed to find some scumbag with no morals to do damage control for the unending flow of articles and studies that expose the true devistatation that is being caused by this incompetant joke of a government agency.

    Reply this comment
  7. Charlie Peters
    Charlie Peters 29 April, 2010, 10:36

    Arnold, BAR & CARB using AB 2289 Eng to cut green collar jobs

    http://www.indybay.org/newsitems/2010/04/18/18645036.php

    Reply this comment
  8. Concerned in So Cal
    Concerned in So Cal 10 May, 2010, 16:00

    Most of the comments do not reflect the fact that AB32 will cost us all a lot of money – with negligible overall impact. It seems that politicians (most of whom know virtually nothing about what they propose) want to be the first on the block with a new regulation that will “save us all” from something. I would like to see virtually everyone voted out of office for incompetence. CA is mired under ridiculous regulations on all levels – environmental pretty much leads the pack. Typically small business takes the brunt of the onslaught of the regulatory morass.
    California business cannot compete nationally or internationally if the companies’ costs exceed competitors from other states and countries. This and most other environmental laws help drive business out of CA and into other states and countries. Thank you do-gooder politicians.

    Reply this comment
  9. Maralago
    Maralago 15 July, 2010, 13:37

    I find it hilarous that someone would call “truthsquad” a “complete joke”. The real joke is on the unfortunate uninformed who happen across this site and are misled by it’s supposed “watchdog” title. In fact, this joke site is paid for by the ultra right wing conservative, oil-backed, Republican-controlled Pacific Research Institue, second only to the American Enterprise & Heritage stooges who lie, omit & twist data to make it look like their greedy backers are on America’s side. Why then are middle-class American’s wages – and job options – at an all time low during this recession, yet those who were millionaires before have seen their wealth grow 39%? Easy – Americans are too stupid to see through the cons of people like Katy Grime and her deceitful con artists colleagues. You should be ashamed of yourselves.

    Reply this comment
  10. MIKE
    MIKE 4 October, 2010, 22:02

    Went to the TruthSqaud facebook page. They had plenty of links bashing the supporters of 23, but when it comes to supporting their claim that there are many docments that support ab23, they are silent? Hmmmm. Not even one link?

    Reply this comment
  11. Spurwing Plover
    Spurwing Plover 15 August, 2016, 07:46

    How about a Hot Air Tax to be paid by certian persons who produce the Hot Air by always yammering about Global Warming/Climate Change start with Hollywood celeberties and end with the various enviroental activists

    Reply this comment

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