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California unveiled Friday its final blueprint of a market system to curb greenhouse gases, relaxing expected rules in the face of a weak economy in a measure that could set the tone for the nation’s climate policy.
By agreeing to give away virtually all necessary permits to factories and power plants when the program starts in 2012, rather than sell them at auction, the state is acknowledging the challenges of double-digit unemployment — and the reality that pollution decreases as the economy slows.
California aims to cap total emissions of gases linked to global warming and let factories and power plants trade for an ever-decreasing number of permits to emit gases.
In theory, market forces will drive efficiency in the system, known as cap and trade.
There is still a debate about the economic merits of the plan, which planners in the Friday draft estimate will shave about 0.1 percentage point from annual state growth.
Many Californians see such environmental regulation as positive for the economy by spurring green jobs. Voters next Tuesday could put on hold a climate change law, including the emissions market, but polls show the Proposition 23 challenge to the state’s climate change law is set to be rebuffed.
After the failure of federal climate legislation, the fate of California’s law and the details of its cap-and-trade plan are seen as a U.S. turning point — either away from addressing climate change or toward stronger action.
“California is the biggest icebreaker there is, and if that ship stops moving it will have a huge effect on everyone else,” said former state climate change planner Jon Costantino, a lawyer at Manatt, Phelps & Phillips, who said passage of the rule, rather than its details, was the key for alternative energy clients.
Under the revised plan, polluters will be given on average about 97 or 98 per cent of the permits they will require in the first year.
The state will give away 100 per cent of permits through 2020 to oil drilling, cement and other industries that otherwise might shut down if forced to pay for permits.
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