California’s cap-and-trade program will create significant financial penalties for companies like ours that chose to invest in a cleaner method of powering our operations. Our method of electricity generation was incentivized by our state not long ago, but now we are being penalized for our clean energy generation facility under Assembly Bill 32’s cap-and-trade program. We are not an isolated case. Many companies throughout various industries will be severely penalized by this regulation.

We are a family-owned company in Signal Hill specializing in responsible and sustainable exploration, development and production of oil in urban areas. We produce more than 1 million barrels of oil a year.

With that oil we produce natural gas, which is essentially a byproduct. To efficiently utilize this byproduct and reduce our reliance on utility-generated electricity, our company constructed an in-house natural gas-powered electrical generator that powers the majority of our operations.

This generator was installed entirely at our cost and utilizes the best available control technology to reduce emissions. It is one of the cleanest electrical generating facilities in Southern California and is significantly cleaner than utility gas-powered generation sources. It has also added to the electrical supply for Southern California and has been a factor in forestalling the need for new generating capacity.

AB32, the Global Warming Solutions Act of 2006, is the most expensive regulation of its kind in history, mandating the control of greenhouse gases with the goal of bringing emissions to 1990 levels. The current cap-and-trade rule creates a trading market for businesses to buy the rights to produce greenhouse gases. It is essentially a tax that is being imposed by the California Air Resources Board, an agency that is not accountable to our state Legislature.

Broken promises

The Legislature sold AB32 as a regulation that would help the environment while protecting the economy. Legislative supporters promised that utility and gasoline costs would not increase with the bill’s implementation. The opposite is happening. Businesses are being taxed severely in the form of buying carbon credits and the costs will be passed on to consumers. Electricity bills will go up and it will dramatically increase the cost of gas and diesel.

The impacts will be serious. We talked with the owner of Zenith Specialty Bags Co. in the City of Industry. Among other things, their 240 employees make food wrappers and bags for Starbucks, In-N-Out and others.

“This cap-and-trade auction comes on the heels of higher workers’ comp payments, more expensive rules from the (Air Quality Management District) and more regulations from (California Occupational Safety and Health),” said Zenith owner Scott Anderson. “Our family has had this business for 67 years, but why would I stay in the state?”


For reprint and licensing requests for this article, CLICK HERE.