California Fee on Greenhouse Gases

For decades the state of California has proven to be among the leaders in the environmental movement. Through radical legislation and strong political activism, the state has remained on the forefront in terms of innovation. California continue to fulfills that role, as on October 12, 2009 the California Air Resources Board passed a law placing a 15 cent tax on every metric ton of carbon produced by energy companies and their consumers. The state plans to lower the 15 cents to 9 cents once the programs loans are paid off. The tax is expected to rake in over $63 million dollars in tax revenue in its first year, which will be used to pay off debts and to assist funding for California’s climate change law, which requires annual testing and reporting of greenhouse gas emissions. These laws all fall under California’s global warming bill, which has emission caps on Greenhouse gases, and the new legislation helps strengthen this legislation by actually being able to enforce it.

This is new tax is the first of its kind and is commonly known as a part of the widely debated concept of a carbon tax program, and in this case, a greenhouse gas tax program. Because the tax will be passed down to the consumers, it promotes using less electricity among coal, natural gas, and petroleum producers. This law will also coincide with California’s planned cap-and-trade system that will be put in place in 2012. A cap-and-trade system has more definitive environmental results, but less predictable economic outcomes. On the contrary, carbon tax programs rely on market forces to influence individual environmental change. By easing companies and firms into the regulation of greenhouse gasses, the state can prepare them for future stricter environmental regulation.

The carbon tax program in California will not only help fund many of the states programs and encourage a smaller energy use per capita in the state, but it will also enforce the 20% planned decrease in greenhouse gas emissions by 2020. Under climate change law of 2006, the state of California “delegates broad authority to the California Air Resources Board,” allowing regulations to be enforced and deadlines to be strict. This governing body is key to the success of such a law because it puts muscle behind an otherwise weak law. The carbon tax put in place by California is the first of its kind, but is clearly a necessary step in the advancement in the regulation of greenhouse gas emissions.