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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