California launches ‘cap-and-trade’ system

November 14, 2012
This March 9, 2010 file photo shows a tanker truck passing the Chevron oil refinery in Richmond, Calif. On Wednesday, California’s largest greenhouse gas emitters will for the first time begin buying permits in a landmark cap-and-trade system meant to control emissions of heat-trapping gases and spur investment in clean technologies. The program is a key part of Californiaís 2006 climate-change law, AB32, a suite of regulations that dictate standards for cleaner-burning fuels, more efficient automobiles and increased use of renewable energy. Associated Press

California launched its "cap-and-trade" system on Wednesday by holding its first auction for pollution permits a process that will put a price on carbon emissions.

The program works by placing a limit, or cap, on emissions from individual polluters such as power plants, refineries and food processors.Businesses are required to cut emissions to cap levels, or buy allowances from other companies for each ton over the cap that is discharged annually. Here are arguments from both sides about cap and trade:Refineries and electric companies argue the increased cost of doing business in the state will lead to "leakage," meaning out-of-state competitors will increase production as they pursue more customers and market share.Manufacturers worry that California-made products will become more expensive to produce, leading to higher prices for consumers. Silicon Valley's clean technology industry sees cap-and-trade as a potential boon, requiring emissions cuts that will need new, innovative pollution reduction and energy efficiency technologies.Traditional technology companies such as Cisco, IBM and others are looking to invest in smart-grid and other innovations that will be needed to help fuel California's cleaner economy.



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