MOST IN STATE SUPPORT CARBON-TRADING PLAN

This story by David Baker appeared Dec. 9, 2010 in the San Francisco Chronicle.

A majority of Californians support creating a carbon-trading market to cut greenhouse gas emissions and using the money to help address the state’s widening budget deficit, according to a poll released Wednesday.

The poll from the Field Research Corp. comes a week before California regulators are expected to approve the creation of a “cap and trade” system, which would set an annual limit on the state’s greenhouse gas emissions and force companies to buy permits to release those gases. The annual limit would decline over time.

Sixty-four percent of the people polled in the survey, commissioned by the nonpartisan Next 10 public policy group, support starting a cap and trade system within the state. And 54 percent want the money used to alleviate painful cuts in government services caused by the state’s budget crisis.

Next 10 founder F. Noel Perry said the poll results reflect Californians’ belief that the fight against global warming represents a business opportunity for the state, home to many companies specializing in renewable power and alternative fuels.

“It’s uniquely Californian,” Perry said. “These are not the same results you’d see elsewhere in the country.”

The poll explored in detail what Californians would like to do with the money raised by a carbon trading market. In addition, Next 10 released five reports Wednesday looking at the economic impact of one key question in the market’s initial design – whether the state should auction all the permits at first or give them away for free.

The cap and trade system that the California Air Resources Board is expected to approve next week would initially give away 90 percent of the permits, known as allowances. Companies would be able to buy and sell permits to each other as needed. Over time, the number of allowances given away each year would decline, ratcheting up the cost to companies.

In general, the studies commissioned by Next 10 found that by 2020, the cap and trade system would have little economic impact on the state – pro or con – regardless of whether the permits were auctioned or given away. Under most scenarios, the state economy would benefit from the new system, adding jobs.

The economy would fare best, however, if all the allowances were auctioned and the money were returned to Californians either as income tax relief or an annual dividend check. Giving away the allowances at first would benefit energy-intensive companies, but wouldn’t give as big a boost to the economy as a whole.

“If you recycle the revenues to households, households would tend to spend a lot of that money on goods and services,” said Richard Morgenstern, a senior fellow with the Resources for the Future think tank, who co-wrote one of the reports. “Channeling the money to the energy-intensive industries may help them, but it doesn’t give you as much bang for the buck as channeling it to people who are going to spend it.”

A majority of Californians surveyed by the Field Poll preferred using the auction proceeds to alleviate state budget cuts, rather than distributing it to households. But if regulators choose to give the money back to Californians, 33 percent of those polled want it in the form of a tax rebate. Twenty-seven percent would use it to cut the state sales tax. Fourteen percent would prefer an annual dividend check.

Field Research interviewed 493 registered California voters for the poll, which has a margin of error or plus or minus 4.5 percentage points.