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Comment 67 for Cap & Trade PDR (dec-14-pdr-ws) - 1st Workshop.
First Name: Bill
Last Name: Buchan
Email Address: buchan@mktpotential.com
Affiliation: Graphic Packaging International
Subject: Recommendation for Free Allocation of Allowances
Comment:
We ask the ARB strongly consider the allocation program that was set up for the US sulfur dioxide emission trading program, which employed free allocation with a modest level of auctions to address expansions and contractions normal in industry. If free allocation is not employed, California is in-effect taxing industry for the privilege to emit GHG, which today carries no cost burden. To do this immediately beginning 2012 provides industry no recourse other than to shutdown or reduce output to avoid unbudgeted tax burdens. This type of tax burden may be borne by cash-rich firms, but would punish cash-poor firms; hence GHG reductions will come as a result of availability of cash as opposed to incentivizing industry to strive for GHG reductions through greater efficiency. Free allocation will also reduce the level of auction activity, which will then require less management effort from ARB, reducing costs. While individual auctioned allowances for CO2 may rise some, the overall costs to industry are reduced through free allocation of allowances, regardless of whether distribution is done by output-based, fixed allocation, or benchmarking.
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Date and Time Comment Was Submitted: 2010-01-11 16:12:32
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