Even though momentum is building for action to curb global warming, major business groups and local businesses are lining up against legislation in Sacramento that would place caps on industrial greenhouse gas emissions.

The flashpoint for businesses is AB 32, by Assembly Speaker Fabian Nu & #324;ez, D-Los Angeles, and Assemblywoman Fran Pavley, D-Agoura Hills, which would make California the first state to adopt the Kyoto Accord by requiring businesses to reduce emissions of greenhouse gases primarily carbon-based chemicals to 1990 levels by the year 2020.

Oil companies, electric power utilities, cement makers, chemical and steel plants and food processors would all be hit hard by greenhouse gas caps and have formed a coalition aimed at derailing the bill in the closing weeks of the legislative session. These industries say the bill would hike energy costs and force carbon emitters to cut production or move out of state.

"It's already a challenge for manufacturers to grow and hire new employees in California because of high energy costs. The last thing we need is another onerous regulation that will push energy costs even higher and convince companies to take their jobs elsewhere," said Jack Stewart, president of the California Manufacturers and Technology Association.

Among the Los Angeles-area facilities hardest hit would be the eight refineries in the South Bay and harbor areas, electric power plants throughout the region and cement manufacturing plants.

Take the Western States Petroleum Association, which counts six L.A. County refineries among its membership including BP plc.'s Carson refinery and Chevron Corp.'s El Segundo refinery.

"If these caps are imposed, refineries would have to reduce production 17 percent to get back to 1990 carbon emission levels," said Joe Sparano, president of the association. "That's the equivalent of shutting down three average-sized refineries each producing 100,000 barrels per day of refined product."

Sparano said any decline in refining capacity would have disastrous economic consequences for the state, since refined gasoline that meets California's environmental standards is already in tight supply. "People are saying we need more refineries to bring stability to the gas market, not shut them down."

Besides, Sparano said, "we've already taken many steps to reduce carbon emissions, investing millions of dollars." He cited cogeneration programs that produce electricity onsite using refined oil.

Another argument put forward by business interests is that instead of meeting the caps, some companies will simply shift operations to other states and emit carbon gases from those states.


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