Thursday, February 5, 2009
The California Legislature must pass a new budget to close an estimated $40 billion deficit. While there have been discussions about how to accomplish this, without increased revenue there’s no feasible solution.
The state is already borrowing for expenditures to employees, contractors, schools and other creditors. By continuing to recognize current obligations at a budget level set in November and in excess of tax collections, the state has already incurred the expense.
Cutting the budget will not “un-obligate” money already spent. A family that has already written checks for utilities and rent without sufficient funds cannot remedy itself by turning off lights later.
Once it becomes clear that we need new taxes, the decision becomes which taxes should be increased. A carbon tax was already agreed upon last year.
AB 32 requires the California Air Resources Board to develop regulations and mechanisms to reduce California’s greenhouse gas emissions 25 percent by 2020. Mandatory caps will begin in 2012 for significant sources and ratchet down to meet 2020 goals.
Carbon credits create a limited and reducible permit process for releasing carbon dioxide into the atmosphere. The state sells carbon permits to emitters of CO2. While detractors call it a carbon tax, proponents believe fees are needed to pay costs associated with global warming, including increased forest fire suppression.
As a coastal county, Monterey should recognize the costs of global warming. Sea levels are rising 3.1 millimeters year. This seemingly small amount will require all the marinas, docks, piers, harbor facilities and seaside parks to be rebuilt or protected by seawalls. Moss Landing power facilities will require protection, and the costs will be passed on to the public in the form of higher electrical rates. Such costs are incurred daily but not recognized until the facilities need rebuilding. It would be wise to offset the expense as it’s incurred. A carbon tax simply recognizes the expense and allocates cost to its source.
Two of the largest local contributors to global warming are the power plant in Moss Landing and the cement plant in Davenport. Even though the power plant uses the newest “combined cycle” technology, it’s one of the largest CO2 emitters in United States. The Davenport cement plant, owned by the Mexican giant Cemex, was built in 1905 and can produce about 980 million tons of Portland cement per year– emitting an equivalent weight in CO2 gases, and using coal, a fuel much more polluting than natural gas.
But new technology may turn cement’s carbon footprint into a carbon sink. Last spring, Calera– a cement company founded by Stanford earth scientist Brent Constantz and funded by venture capitalist Vinod Khalsa– began testing a process that produces Portland cement without emitting CO2. The Calera technology actually sequesters carbon inside the cement, potentially removing up to a ton of atmospheric CO2 for every ton of cement produced. (See “Concrete Solution,” Sept. 11, 2008.)
Calera is testing its product at the closed Kaiser magnesium facility directly to the Moss Landing power plant. While a full-scale cement plant able to absorb all the CO2 from Moss Landing would cost $250 million, it would cost much more to retool the Davenport Cemex plant to produce “green” cement. Only a public subsidy would make this investment possible.
Why not impose a carbon tax on CO2 emitted from the Moss Landing power plant and Cemex? The amount would be set under AB 32. The power company would either pay an emissions tax to the state or pay Calera to “treat” its flue gas.
None of this will occur without a carbon tax. The current cost to dump CO2 into the air is zero. Green cement is initially more expensive to produce because it requires a huge capital outlay. Emitting CO2 is not free– under AB 32, it’s simply an unrecognized, deferred expense that won’t get paid until 2012 when the mandate kicks in. Like other budget expenses, we accrue the expense, write the checks, stiff the state’s creditors and wait until somebody figures out that 2012 has arrived.
In Monterey County, global warming is a local issue. We need state tax income to combat it.
Assemblyman Bill Monning, an environmental supporter who sits on the budget committee, would likely embrace a carbon tax. The governor must recognize that after taking credit for a bill that addresses climate change– AB 32– he now has to actually enforce its provisions by making investments in green technology profitable.
A carbon tax would accomplish this.