LA Times Fails to Explain Cap and Trade Costs
The Los Angeles Times’ Margot Roosevelt covered the California Air Resources Board adoption of a cap and trade system on December 17th, writing:
Under the state’s cap-and-trade plan, emissions from the 600 biggest industrial facilities, including cement manufacturers, electrical plants and oil refineries, would be capped in 2012, with that limit gradually decreasing over eight years in an effort to encourage energy efficiency and renewable sources of power.
Companies would be granted “allowances” for each metric ton of greenhouse gas they emit, and they could trade unused allowances among themselves to cut costs.
But what Roosevelt never explains is what “costs” allowances would help cut. Later she reports:
The air board would give free allowances during the first three years, then phase them out for most industries. But cement makers and oil companies, considered prone to moving operations out of the state, would be granted free allowances for eight years.
But why would cap and trade make cement makers and oil companies “prone to moving operations out of the state”? Roosevelt never explains. The fact is that any cap and trade policy that reduces carbon emissions necessarily does so by raising energy prices thus making costs for manufacturers and other employers much higher.
This is a fact LA Time readers might want to know with unemployment in California already above the national average at 12.4%.