New phase for AB 32 administrative fees proposal

By CMTA Staff

Capitol Update, Jan. 30, 2009 Share this on FacebookTweet thisEmail this to a friend

The California Air Resources Board (CARB) has hit the ground running since approval of the AB 32 scoping plan last December.  CARB plans to develop regulations for a new administrative fee in time for approval by the CARB Board on May 28.  A timeline for developing regulations under AB 32 was released at a day-long workshop this week.  Staff discussed plans for doing a new economic analysis for the scoping plan by December 2009 and designing a cap and trade program by 2012.  

Under AB 32, CARB has authority to adopt a schedule of fees "to be paid by the sources of greenhouse gases regulated pursuant to this division."

The administrative fee concept discussed this week would raise over $100 million in early 2010 from oil refineries, natural gas utilities and/or direct purchasers of natural gas, facilities that burn coal, cement manufacturers, and gasoline and diesel importers. (The reference to "direct purchasers of natural gas" creates some questions about who will be responsible when natural gas is imported into California, passes through many intermediaries and is ultimately used by a consumer. It is not the intent of CARB to charge twice for the same volume of fuel.)

The fee would be based on the volume of fuel adjusted by the CO2 intensity of the fuel, as well as the volume of process emissions associated with refining oil or manufacturing cement. The fee would include paying back funds ($57 million) borrowed from state special funds since passage of AB 32.  (Those funds include the Motor Vehicle Account, the Beverage Container Recycling Fund and the Alternative and Renewable Fuel and Vehicle Technology Fund.)  Stakeholders at the workshop questioned CARB staff about the legality of imposing a prospective fee to cover historical costs.

CARB staff believes this approach will meet their goal to have a fee that is broad-based, economy-wide, predictable and simple to administer.  The fuel sales and process emissions of a few number of payers (about 70) is responsible for about 75% of California’s GHG emissions.  However, for fuel and other commodities bought and sold in regional and global markets, there is no ability to pass along fees to the consumers, and the fee can hardly be considered "broad-based and economy-wide" in those circumstances.  

CMTA will be participating in the development of the administrative fee.  

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