Green

Bay Area regulators consider tax on greenhouse gas emissions

Regulators in the Bay Area are considering taxing carbon, methane and other greenhouse gas emissions by businesses at the rate of 4.2 cents per metric ton of CO2 emitted, and could pass the rule before the middle of the year, in effect creating a new tax for doing business in the area.

The new tax was proposed last week by the Bay Area Air Quality Management District, the smog regulation agency that oversees nine counties near San Francisco, including several that play host to refineries and power plants. Revenue from the tax would be fed back into local air quality and emissions programs.

If passed, the measure would mark the first time businesses would be forced to pay for their emissions. The idea of an emissions tax is often kicked around in intellectual circles, but rarely seriously considered by government.

However, California has been a trailblazer for such initiatives, and may prove to be so again. Once the Bay Area has a rule in place, it’s likely others will follow suit around the state and, eventually, the country.

The tax would be far from crippling. According to the San Jose Mercury, which has done some of the calculations, most small businesses would pay only a few dollars a year, while the biggest emitter, a Shell refinery, would pay $186,475 per year.

The point is the make a start, though. If the Bay Area can prove the model, businesses will have a new motive to reduce emissions, which will create business for new startups — both those with technology to reduce emissions, and consultancies that can help figure out where to cut back.

Some risk also plays in. Any new tax is an impetus for business to move away, and the proposal could generate some significant pushback. Want to weigh in? The ultimate decision is up to the agency, but a first public workshop on the rule is on February 25th.