Down the rabbit hole on cap and trade

Sept. 14, 2012

By Katy Grimes

The clean, green fairy tale is really a nightmare in California, and all sense has gone down the rabbit hole.

Nonsensical is the best word for what is occuring in California with cap and trade. Nonsense may be fun and is fine when children and adults are being delighted by a tall tale, but there is no delight in the nightmare California is about to face. A harsh reality is about to come crashing down on all businesses and consumers, and a wrecking ball will hit California’s economy.

This fairy tale is more like the strange world of Alice in Wonderland, where nothing is as it appears.

Central governmentland

The California Legislature had a chance to do something useful with the state’s flawed cap-and-trade plan before they ended the two-year session on August 31. But they did not. Instead, they passed a spate of bad spending bills, which some claimed would assist the California Air Resources Board with the implementation of AB 32, they keystone legislation for cap and trade.

But every government-created green economy has collapsed in dismal failure.

Numerous studies have shown that California’s cap and trade auctions will lead to significantly higher energy costs. California already suffers under high energy costs — piling on even higher costs will surely speed up the mass business exodus out of the state.

“The business community has long supported a well-designed cap and trade program to help meet the goals of AB 32, the 2006 Global Warming Solutions Act,” Jack Stewart, president of the California Manufacturers and Technology Association, recently wrote in Capitol Weekly. “AB 32 instructs CARB to implement AB 32 in the most cost-effective, technologically feasible manner.”

But like Alice, businesses have quickly discovered that cap and trade Wonderland will not fulfill any of their desires. Wonderland thwarts their expectations at every turn.

Carbon horse trading

CARB, the notorious rogue state agency led by Mary Nichols, made the decision to withhold some of the carbon emission allowances, thereby forcing California businesses to compete for carbon allowances in a global market.

This proved what many have been saying all along about AB 32, and Nichols — she wants to play in an international arena, and AB 32 implementation gets her there. It also goes a long way in explaining why CARB registered its new corporation, Western Climate Initiative Inc., in Delaware, not California.

CARB’s handling of cap and trade thus far has been abominable, embarrassing, and like the events following Alice’s fall down the rabbit hole in wonderland, confusing but symbolic.

California Wonderland

Nichols, as the director of the California Air Resources Board, is reminiscent of the Queen of Hearts from Alice in Wonderland, and private sector businesses are the vulnerable Alice.

As the ruler of Wonderland, the Queen of Hearts is the character that Alice must inevitably face to figure out the puzzle of Wonderland.

California businesses must face CARB in order to figure out the puzzle of cap and trade.

Unlike many of the other characters in Wonderland, the Queen of Hearts is not as concerned with nonsense and perversions of logic as she is with absolute rule and execution.

“We will be combing the record for every minor glitch we can possibly find to fix, but I am delighted that everything so far shows that the practice auction went well, and that the participants found the auction website easy to use,” Nichols said after the mock cap and trade auction was held on August 30.

Mock cap and trade auction

In what could have been a Wonderland Mad Hatter tea party, 150 utilities and businesses across California participated in a mock three-hour cap and trade auction on Aug. 30, run by the California Air Resources Board, to “put the system to the test.”

The businesses made fake bids on 60 million fictitious carbon allowances.

But one utility apparently decided to deliberately muck things up to see how CARB would react. California Energy Markets reported that the San Francisco Public Utility Commission was assigned $90 million in “funny money” to use in a carbon-allowance buying spree. But SFPUC made a bid for 10 billion allowances at $9.99 each, after their first initial offering of 900,000 allowances at the $10 floor price.

“The bid was not rejected, even though the total settlement price for the bid would have been way over the SFPUC’s bid guarantee of $90 million,” California Energy Markets reported. “When the SFPUC finally logged out of the auction system, about 30 minutes after starting, staff had placed eight bids for more than 10 billion carbon allowances at bid prices ranging from $1.17 to $300 per allowance.”

“The SFPUC, which will receive an initial allocation of about 95,000 allowances from CARB, stands to reap at least $950,000 at auction given the $10 floor price.”

Barbara Hale, the assistant manager of SFPUC’s power enterprise, stated that the proceeds “would be very meaningful,” given that the SFPUC recently cut more than $1 million out of its capital plan, including funding for energy-efficiency programs and renewables,” California Energy Markets reported.

LAO gives thumbs down on cap and trade

Even the non-partisan Legislative Analyst’s Office gave California’s cap and trade program a two-thumbs down.

In a recent letter, several members of the Assembly requested that the LAO provide information about the free allocation of allowances under the cap and trade program proposed by CARB.

The LAO explained in a return letter that an allowance auction is not needed to meet the mandate of AB 32, reducing the greenhouse gas emissions statewide to 1990 levels by 2020.

The LAO also stated that cap and trade regulation will greatly increase production costs for businesses forced to comply with CARB’s regulations.

Other views

“The California Air Resources Board acknowledges AB 32 will result in a net loss of up to $35 billion in gross state product, while researchers at Andrew Chang and Co. found that California will lose $153 billion, even under optimistic conditions,” Andrew Chang recently wrote in a Sacramento Bee op ed, removing all fairy dust from the situation.

“ARB’s current AB 32 programs, including cap and trade, will cost the average California family $2,500 per year and destroy 260,000 jobs. The Sacramento metropolitan area alone can expect to lose more than $93 million in local tax revenue by 2020. The rosy message propagated by ill-informed and self-serving proponents is the real fairy tale.”

But no one is listening to California business owners and CEO’s.

“It’s frighteningly clear that the California Air Resources Board, in its eagerness to pursue the goals of Assembly Bill 32, the state’s global warming law, has lost sight of the significant flaws and disastrous economic impacts its policies will have California businesses and residents,” Ronald Stein, vice president of PTS Staffing Solutions in Irvine wrote in the Orange County Register.

“CARB certainly doesn’t need another report to tell it that as long as California is the only jurisdiction with policies as stringent as those associated with AB 32, all their programs combined won’t make a dent in global warming – the agency has acknowledged as much in the AB32 Scoping Plan. Yet CARB insists on its quixotic crusade to lead the world in climate change policy.”


Write a comment
  1. Wayne Lusvardi
    Wayne Lusvardi 14 September, 2012, 08:51

    The title to this very good article is apropos. Cap and Trade may lead to taxes going down the rabbit hoe. The proposition “reduced air pollution results in reduced tax base” ought to be interesting to see play out. I wonder how long government will stick with Cap and Trade if it undermines tax revenues much much more than Prop 13 allegedly ever did?

    Reply this comment
  2. Tom Tanton
    Tom Tanton 14 September, 2012, 09:02

    Odd that CARB continues this abomination even though the metric of success behind AB32 (achieve 1990 levels of emissions) has already been achieved (at least nationally.) Funny how CARB never mentions THAT, nor the fact that CARB’s rules themselves are what’s holding back even greater emission reductions in California.

    Reply this comment
  3. Donkey
    Donkey 14 September, 2012, 10:14

    Cap and trade is nothing but a dense fog hide behind so the RAGWUS feeders can control and steal from the private sector taxpayers. 🙂

    Reply this comment
  4. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 14 September, 2012, 10:23

    What does ragwas stand for again– ?

    Reply this comment
  5. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 14 September, 2012, 10:38

    Here’s five pollutants we already reduced using cap-and-trade.

    1. Getting the lead out of your gasoline. In the 80′s, congress set up a precursor to cap-and-trade that brought it closer than other credit programs using trading and banking of environmental credits. Job done, we have no lead in gasoline now, (so it must be something else that is making us dumber now!) and it was cheaper than expected for the oil industry to comply.

    2. Closing the Ozone hole. (God Bless Ronny Rayguns) Industrial manufacturers affected by the need to phase out refridgerant pollutants were put in a cap and trade system in order to meet the Montreal Protocol goals. They did meet the goals, phasing out CFCs and halons. It was not expensive.

    3. Ending Acid Rain. A cap was placed on allowable emissions of SO2, a precursor to acid rain. The cap ratcheted down every year. It worked. The polluting coal plants traded among themselves with the EPA administering the program. We have no acid rain now, and it was cheaper than expected to stop polluting. SO2 emissions from the power sector decreased from 16 million tons in 1990 to 10 million tons in 2005, and now a 50% reduction has been achieved in the 20 years of the program.

    Imagine if we could look back at 2010 and say this was the year we finally overcame our fear of the other side, and decided to work together to make something that good happen again. With oil now despoiling one our shining seas, its about time we did.

    4. Cleaning Los Angeles Air. Under under the RECLAIM cap-and-trade program begun in 1994, California’s South Coast Air Quality Management District has reduced NOx emissions 60% and SOx emissions 50%, and continues to (previous story) clean up.

    5. Cutting Europe’s carbon footprint to half ours. The EU Emissions Trading System has operated successfully for two years and covered 11,500 emitters: not just oil and coal (as is proposed here), but metal, paper, glass and ceramics production as well. The paper industry cut its emissions almost in half, the auto industry over there now makes cars cleaner than ours and the EU lowered its carbon emissions below its Kyoto targets.

    See bunker buddies?? Al Gore won’t get rich over this stuff and take over the internet– relax! Reayguns had a good idea!

    Your servant,

    Reply this comment
  6. Hondo
    Hondo 14 September, 2012, 13:02

    I went to church and meditated over me being censored for calling someone a racist pig and found I was at fault. ” He who is without sin cast the first stone”.
    I have decided I can’t post anymore on the web, nor even attend church till I have atoned for my sins.
    I here-by apologize to the person I called a racist pig( I forget his call letters). I over reached in my anger at what I consider an offensive personal attack on the Mormon religion of whom I have family members who are members. The term ‘magic underwear’, in the context it was used, I consider to be offensive. But that does not permit me to go overboard as I did.
    I also apologize to all who write and edit this fine website. And also to all who read and comment here as I do.
    I’ll not muddle this apology up with anymore excuses.

    Reply this comment
  7. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 14 September, 2012, 13:26

    Hondo– You’re a good man (or woman)– Apology accepted. And always remember what Paul said in his letter to the Ephisians.

    Reply this comment
  8. Queeg
    Queeg 14 September, 2012, 14:46

    He is a carpetbagger.

    Reply this comment
  9. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 September, 2012, 16:46

    I asked NTHEOC what magic underwear was, he was the one that made the comment.

    I won’t make fun of anyones relegion.

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 14 September, 2012, 16:48

    Hondo– You’re a good man (or woman)– Apology accepted

    teddy, the apology was to John, not to you.

    BTW-when are YOU going to apologize to ME for you being 0-10 on your predictions 😉

    Reply this comment
  11. us citizen
    us citizen 15 September, 2012, 12:51

    You dont have to apologize to me at all. I believe in free speech and if the other side cant take it, so what. That’s their problem. This is just more PC garbage. But if you have been guilted into apologizing and it makes you feel better then go for it. I would stop worrying about it.

    Reply this comment
  12. Queeg
    Queeg 15 September, 2012, 14:34

    I bet lots of you religion bashers wear Madras short pants and go to Six Flags as a Munster Family Outing using discount chits you find on your minivan in a Kmart parking lot!

    Reply this comment
  13. Ted Steele, The Decider
    Ted Steele, The Decider 15 September, 2012, 15:24

    I disagree us cit— civility is good in discourse. The founders knew it. Apologies are better than duels. Life is brutish rood and short. I for one appreciated his apology.

    zero remains….well…….ah…….wait for it……………………………………….0 for 10 ™ !

    Reply this comment
  14. Rex the Wonder Dog!
    Rex the Wonder Dog! 15 September, 2012, 23:34

    12-0 Nov 6 baby!!!

    Teddy, I have a C-note that Prop 30 LOSES, want to put some $$$ where your mouth is lil buddy?????????

    Didn’t think so!

    BAM!!!!!!!!!!!!!!!!! 🙂

    Reply this comment
  15. Ted Steele, The Decider
    Ted Steele, The Decider 16 September, 2012, 09:13


    0 for 10 ™

    nuff said!

    Reply this comment
  16. Queeg
    Queeg 16 September, 2012, 10:48

    Shun him

    Reply this comment
  17. Bob
    Bob 16 September, 2012, 11:42

    “The business community has long supported a well-designed cap and trade program to help meet the goals of AB 32, the 2006 Global Warming Solutions Act,” Jack Stewart, president of the California Manufacturers and Technology Association, recently wrote in Capitol Weekly.

    Well, they’re getting what they deserve. Global warming ins a fraud and if they go along with it this is what happens.

    Just like the idiot Caulifornia (as Ahnode sez) voters they are going to get it good and hard. And Algore is laughing all the way to his mansions (after stopping at the bank first).

    Reply this comment
  18. Queeg
    Queeg 16 September, 2012, 12:12

    What a crock..

    This is not Pravda or Investia…it is CWD!

    Global warming was hatched most likely in a curry smelling hell hole in North Berkley by a nest of blue hair hippies….

    Reply this comment
  19. Ted Steele, The Decider
    Ted Steele, The Decider 16 September, 2012, 20:04

    roger Queeg mssg received– ted out

    Reply this comment
  20. Ron Kilmartin
    Ron Kilmartin 16 September, 2012, 23:51

    The CO2 emission versus global mean temperature over the last 15 years is a non-relationship. Absolutely no correlation. The following article shows the latest trend of CO2 emission compared to the most current global temperature DATA set (DATA, as opposed to manipulated computer MODELS).

    This graph confirms Mary Nichols statement as Katy noted that the It is like throwing the money into a landfill. $billions that CA is spending on CO2 emission control are exactly how Katy has titled the article: money down a rathole. Nothing California can do will affect global temperatures one iota. Every dime spent by the state and local governments, and every cap and trade ripoff hidden tax passed to businesses and consumers is a waste. When are the people of CA going to wise up and put their foot down on this emission control scene from Groucho Marx?
    Alice in Wonderland? So what is the puzzle of Wonderland.? What are Brown, Nichols and the Legislature getting out of this wild spree of trashing the state’s resources and the peoples wealth as they play Don Quixote? Some kind of enviro feel-good? They feel good about throwing our money away for nothing??? Somebody is getting something out of it, but it is not the people, of Califonria and apparently not the schools (and it is sure not the global temperature).
    So the Governor wants billions in tax increases (Prop 30) to pay off his public union friends. And the threat is if the voters do not vote in the taxes, he will not reduce spending for his cronies, he will just take what he wants from the schools –that is his plan, his threat to the people. Before he takes one dime from the schools, he must defund CARB and put AB 32 entirely on ice as enviroganda nonsense and an environmental perversion.
    I encourage Californians to vote no on Prop 30.

    Reply this comment
  21. Ted Steele, Associate Prof.
    Ted Steele, Associate Prof. 17 September, 2012, 07:01

    Sorry Ron– wrong.

    WASHINGTON – The relentless, weather-gone-crazy type of heat that has blistered the United States and other parts of the world in recent years is so rare that it can’t be anything but man-made global warming, says a new statistical analysis from a top government scientist.

    The research by a man often called the “godfather of global warming” says that the likelihood of such temperatures occurring from the 1950s through the 1980s was rarer than 1 in 300. Now, the odds are closer to 1 in 10, according to the study by NASA scientist James Hansen. He says that statistically what’s happening is not random or normal, but pure and simple climate change.

    “This is not some scientific theory. We are now experiencing scientific fact,” Hansen told The Associated Press in an interview.

    Hansen is a scientist at NASA’s Goddard Institute for Space Studies in New York and a professor at Columbia University. But he is also a strident activist who has called for government action to curb greenhouse gases for years. While his study was published online Saturday in the Proceedings of the National Academy of Science, it is unlikely to sway opinion among the remaining climate change skeptics.

    However, several climate scientists praised the new work.

    In a blunt departure from most climate research, Hansen’s study — based on statistics, not the more typical climate modeling — blames these three heat waves purely on global warming:

    Last year’s devastating Texas-Oklahoma drought.

    The 2010 heat waves in Russia and the Middle East, which led to thousands of deaths.

    The 2003 European heat wave blamed for tens of thousands of deaths, especially among the elderly in France.

    Reply this comment
  22. Ron Kilmartin
    Ron Kilmartin 17 September, 2012, 08:32

    Hansen a scientist? Charlatan is a better word. 1950s? How come he did not include the 1930s, when the highest US temperatures were recorded. Or the Medieval Warming of 900-1300, wherein proxy data and agricultural records indicate greater warming than today, and there was no significant man-made CO2. Like all the anti-CO2 activist-“scientists”, he picks and massages the data he wants to cite- and of course the media loves and publishes any activist yelping that promotes the big gov lie.

    Reply this comment
  23. Edward Steele, Chief Investigator
    Edward Steele, Chief Investigator 17 September, 2012, 11:37

    Ronster— You arte incorrect– Hansen et al do include the year 1000 warming—-

    Reply this comment
  24. Ron Kilmartin
    Ron Kilmartin 17 September, 2012, 21:41

    The year 1000? The medieval warming was a 400 year period! The year 1000 was in the rise near the beginning of the 400+/- -year that crested between 1200 and 1300-1400 before declining to the little ice age minimum aroun;d 1600-1650. The Hansen article cited above refers only to the “1950s to the 1980s”.

    It would be surprising if Hansen paid much attention to the Medieval Warming since it contradicts his fairy-tale Anthropogenic CO2 warming theory. Ii is doubtful he seriously investigated the Medieval Warming, even though it was well documented by Lamb some 40 years ago. Lamb’s work has been extensively verified by researchers around the world.

    Reply this comment

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