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Bay Area businesses may pay fee for emissions

Submitted by News Desk on Fri, 05/09/2008 - 11:49am

San Francisco -- Thousands of Bay Area businesses - from boutique hotels to mammoth oil refineries - are poised to pay some of the nation's first fees tied to greenhouse gas emissions under a plan proposed by regional air pollution regulators.

If the proposal is approved next month, the Bay Area Air Quality Management District would charge 4.2 cents for every metric ton of carbon dioxide released, amounting to as much as $200,000 annually on power plant smokestacks in Contra Costa County, or as little as a few pennies a year for a San Francisco apartment complex with a backup generator.

As the national debate on carbon emissions rages and California officials work out the specifics of the state plan to cut greenhouse gases, the district's fee sets the region in the vanguard in the fight against global warming and the effort to track the biggest offenders. Boulder, Colo., last year imposed greenhouse gas fees on consumers and businesses to fund global warming education, energy audits and weatherization.

"These actions provide both models for federal action and reflect a growing desire on the part of the American people to see action on climate change," said Joshua Bushinsky, Western policy coordinator for the Pew Center on Climate Change in Arlington, Va.

The fees on businesses in the nine-county region, which would start July 1, are not enough to deter greenhouse gas production in most cases, critics and supporters agree. Rather, the estimated annual $1.2 million would pay for the cost of monitoring greenhouse gases.

"It's not a fee that would mitigate the effects of carbon - to do that we would be planting trees and buying wind power credits," said agency spokeswoman Karen Schkolnick. "This recovers the cost of the agency integrating climate protection into all of our programs."

The measure is encountering stiff opposition from many of the businesses whose workaday operations entail large-scale carbon dioxide releases - namely, oil refiners and power plants. Their chief complaint rests not on the size of the fee, but on whether the Bay Area plan will undermine wider efforts to curb greenhouse gas emissions.
Critics question wisdom

"The broader the scope of these programs, the more chance you have of being successful ... bringing greenhouse gases down," said Tupper Hull, spokesman for the Western States Petroleum Association. "Programs and taxes like this district's amount to a balkanization of the process at a time when we've not yet really determined the best strategies."

In Sacramento, the California Air Resources Board is examining a range of fees to comply with the milestone 2006 state mandate to cut carbon emissions in the state by 25 percent by 2020. The Bay Area air district is careful to say it is collaborating with state regulators and would integrate any state rules into its system.

Currently, the local board regulates particulate emissions from about 10,000 businesses across the Bay Area; roughly 2,500 businesses would be affected by the new fee. Last week, the agency set a May 21 date for a vote. Though vehicle emissions account for more than 50 percent of the total carbon dioxide released in the Bay Area, that does not fall under the agency's purview.

If the business fee passes, the top 10 companies would pay more than $820,000 - or about 70 percent of the $1.2 million total. The fee for the vast majority of businesses would be less than $1, Schkolnick said.

The Shell refinery in Martinez stands to pay the most: for an estimated 4.4 million tons of carbon dioxide emitted (based on 2005 data) each year, the oil firm would owe just over $195,000. Others in the top 10 include the Chevron refinery in Richmond, a power plant in Pittsburg and a cement company in Cupertino.

"Industrial polluters should face financial consequences for contributing to global warming," said Linda Weiner, director of air quality advocacy and outreach at the American Lung Association of California. "As the planet warms, that means more smog, asthma, hospitalizations. This is a very modest fee, but the cost to the planet and health care system will be much higher."

But Hull, of the petroleum association, said the cost of the greenhouse gas fee ultimately hits consumers' wallets at a time they can ill afford it.

"Californians already pay the highest gasoline taxes in the country at the pump," Hull said. "Any tax like this that increases the cost of providing gas to consumers is a concern."
A fee, not a tax

Schkolnick and the board assiduously avoid the word "tax," because that requires a different approval process. For one thing, she said, the program would levy a relatively tiny amount of money, and is designed to fund a greenhouse gas emissions inventory and a way to track the emissions across the agency's jurisdiction.

A "carbon tax" usually refers to one of two primary mechanisms authorities use to directly cut carbon emissions by penalizing high emitters and rewarding low emitters. For instance, European regulators charge more than $30 per metric ton; Boulder's program is closer to the Bay Area's in price: It averages $16 a year for consumers and $3,200 a year for industrial firms.

"Cap and trade," the other approach, sets limits on carbon dioxide emissions and allows companies to trade carbon credits based on amount of production. Both strategies attempt to make burning fossil fuels pricey and reward investment in renewable energy.

Last week, President Bush urged the United States to halt the growth of greenhouse gas emissions by 2025. But with no specific mandates or proposed legislation, the announcement was widely seen as having no teeth.

With the discussion of global climate moving from "if" to "when" - and, specifically, at what point the damage to the planet and society will become irreversible - local officials simply believe they have no choice but to take a bold step toward charging carbon dioxide emitters.

"We cannot wait," Schkolnick said. "Climate change is happening now."

E-mail Kelly Zito at

This article appeared on page A - 1 of the San Francisco Chronicle