Green

While Washington dawdles over emissions trading, Bay Area passes nation’s first carbon tax

In a first for the nation, the Bay Area Air Quality Management District yesterday voted in a carbon tax applying to nine counties in Northern California. Large businesses will now pay 4.4 cents for every ton of carbon emitted, generating about $1 million a year to be plowed back into environmental studies.

We first mentioned the local carbon tax in February, when local government began considering the measure. It appears the board had a taste for trail-blazing, passing the rule by a 15-1 vote. As in other areas where California has stepped out to lead the way — including vehicle emissions and solar subsidies — the move will likely be closely watched by other states and municipalities.

The scale of the tax is modest at best, with the largest emitters, large local refineries, paying no more than $200,000 a year, a tiny portion of their earnings. That doesn’t mean the move isn’t meaningful, though. Given the quickly changing political climate around emissions, other areas could decide to move ahead with their own taxes, especially if they think they can get away with adding another tax without scaring off businesses.

Contrast the tax to national-level bills like Lieberman-Warner, which proposes to institute a carbon trading scheme in which permits are bought and sold on an open market. While that particular bill, along with similar efforts, holds the potential to sharply curtail emissions in the future, political progress is likely to be slow, especially in the Bush Administration.

Publicly elected officials are rarely fast to pass any bill that could be accused of harming the economy, and that accusation is present in spades for carbon trading, which conservative think tank The Heritage Foundation has said has “extraordinary perils for the American economy.”

Could a grassroots movement toward emissions taxing overcome trading? It’s unlikely, but possible. Arguments abound for both sides, but carbon trading has a significant head start in the rest of the world, and in the United States fledgling companies like APX are building the framework for trading. Emissions taxing would need strong support from government at a higher level, which so far, it hasn’t gotten.

Finally, there’s the chance that local industry groups could sue the Bay Area Air Quality Management District, as the San Francisco Chronicle reports. If they’re successful, carbon taxing in the Bay Area could turn out to be nothing more than a blip on history’s radar.