As federal lawmakers discussed the mechanics of a proposed federal greenhouse gas emissions control program, the California Air Resources Board (CARB) imposed the nation's first statewide carbon fee on some 350 businesses.
Its purpose is to pay for implementing a program required under a 2006 law to bring GHG emissions within the state back to estimated 1990 levels by 2020. Part of the initial collections will repay loans incurred to get the GHG reduction program going.
The targeted businesses represent 85% of the state's total GHG emissions, CARB indicated. Estimated costs would be $120/year for a full-service grocery store, $17/year for a family restaurant, and $9/year for a 100-person office. Households would pay another 77¢/year for gas and electricity and 80¢/year for a car driven 15,000 miles and getting 30 mpg.
The plan, which CARB adopted at its Sept. 25 meeting, anticipates collections from businesses including refineries, gasoline and diesel fuel importers, large natural gas distributors and consumers, and plants that burn coal and petroleum coke.
Total payments
They would pay an estimated $63.1 million during fiscal years 2010 and 2011 to cover the GHG reduction program's $36.2 million of operating costs and $26.9 million of debt repayment, according to CARB.
Fees associated with each source would be about $21.6 million for gasoline, $6.6 million for diesel fuel, $14.6 million for natural gas (excluding electricity generation), $2.7 million for refinery gas, $1 million for catalyst coke, $800,000 for petroleum coke, and $500,000 for associated gas, it said.
Refineries in the state will pay $2-6 million/year under the levy not only for on-site emissions but also those by motorists, according to Joe Costantino, manager of CARB's climate change office.
"The place to collect it is at the refineries, but we're really collecting it for the end-users' emissions too," he told OGJ.
Rejected idea
Catherine Reheis-Boyd, executive vice-president and chief operating officer at the Western States Petroleum Association, said the organization was disappointed that CARB rejected the group's proposal to have the state's Board of Equalization, which already collects several oil product taxes at the refinery rack, collect this one too.
It's significant because 40% of the program's carbon fees will come from transportation fuels, she said.
"We're trying to have a fee regulation that actually works and can be legally sustained," she said, adding, "When the collection point is at the refinery gate, there's no way of knowing if the product is going to California, to Arizona, or to Nevada. Consumers in those other states possibly would pay higher costs as a result of a California law."
WSPA also would like the tax to be more transparent. Reheis-Boyd said, "These are tough economic times. Climate change is not going to be free."
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