California Does it Again: Proposes Nation's First Carbon Fee

Thankfully, California keeps refusing to be a party to the Bush administration's war on carbon pricing.

Latest: The Bay Area Air Quality Management District has proposed to slap a carbon fee on thousands of Air District-permitted facilities emitting greenhouse gases.

Polluters will be charged based on their carbon emissions -- 4.2 cents per metric ton of carbon dioxide. The Air District explicitly says it's not a "carbon tax" but "a cost recovery fee" because the money would go to pay for the Air District's global warming reduction programs and not be funneled into a general fund.

It's expected to generate about a million bucks each year for the Air District's climate efforts. The Shell oil refinery in Martinez, the area's largest greenhouse gas contributor, would be forced to pay $186,475 of that for its 4.4 million annual metric tons of emissions.

Yep: that's nothing. Remember this from a few weeks ago? Shell Rakes in $8.5 Billion in Three Months.

Still, the fee is the first such program in California. And probably in the whole of America. And:

If successful, the fees could be copied all over the state and country, perhaps ultimately at much higher prices.

The Carbon Tax Center agrees:

While the proposed fee is tiny -- 4.2 cents per metric ton of carbon dioxide equivalent, versus the $10.00 per ton of CO2 tax we propose to be incremented each year -- imposing the fee would lay a foundation for substantial carbon taxes in the future.

On the one hand, it's too small a fee to make a dent. On the other hand, it's a big idea the nation has never seen in practice. And a welcome reminder that California, progressive climate change champion, remains a much-needed (and constant) thorn in the federal government's side.

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