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Friday, June 27, 2008

California Will Offer Plan to Cut Harmful Emissions

California will introduce a detailed plan on Thursday to cut greenhouse gas emissions to 1990 levels in 12 years by requiring more energy-efficient appliances and buildings, lowering vehicle emissions and generating 33 percent of its energy from renewable sources.

But the greatest source of reductions would come from capping emissions from utilities, industrial facilities and other businesses, while allowing them to use permits to emit authorized amounts of pollutants. The companies could buy and sell these permits with their counterparts in seven Western states and three Canadian provinces.

These are the broad details of the plan by state regulators to meet the goals of California’s groundbreaking 2006 law requiring reductions in carbon dioxide and other emissions that contribute to climate change.

Since the probable death of national climate-control legislation after a brief Senate debate this month, the California plan is the most comprehensive effort in the country to devise an economy-wide program to reduce heat-trapping gases.

The plan does not , however, offer details about some politically delicate questions, including the costs it will impose on various industries, among them automobile manufacturers and electric utilities, which together contribute 61 percent of these emissions.

Rather than assessing the costs that will be borne by industry, Mary D. Nichols, who heads the California Air Resources Board, said the agency’s “macroeconomic analysis” had shown that the state’s gross domestic product would increase by 1 percent when the plan was fully put into place.

The plan also assumes that the federal Environmental Protection Agency will reverse itself and allow the state to impose stringent emission standards on cars.

A final version of the plan, which makes a 28 percent cut in the 596 million tons of greenhouses gases the state would emit in 2020, is scheduled for adoption by California regulators by the end of the year.

The plan does not propose a formal mechanism for distributing the emissions permits, although it speaks favorably of an auction system.

In general, those companies that produce or use energy largely generated by burning coal have greater emissions and would need more emission allowances than competitors that use different energy sources.

Auctions tend to favor the low-emission companies, while free distribution favors those with substantial greenhouse gas emissions.

California utilities are divided among those that use little coal, like Pacific Gas and Electric in Northern California, and those heavily dependent on it, like the Los Angeles Department of Water and Power, and the coal-dependent municipal utilities have been strongly opposed to a plan that seemed likely to favor their investor-owned counterparts.

H. David Nahai, chief executive of the Los Angeles Department of Water and Power, said Wednesday: “What we’ve said is the considerable investments we’re making in reducing our greenhouse gas emission footprint should be allowed to continue. We should not be put in the position of having potentially hundreds of millions of dollars” diverted to pay for allowances in a cap-and-trade market.

“This document recognizes that and recognizes that utilities such as ours are doing the right thing by increasing their renewable energy investments.”

About 46 percent of his utility’s output is fueled by coal and 30 percent by natural gas; renewable sources now provide 8 percent of the energy, up from 3 percent when California’s climate-change law was passed two years ago.

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