By Leslie Stewart
Bay Area businesses, industries, and agencies which require permits from the Bay Area Air Quality Management District may begin paying a new fee in July to support the Air District’s Climate Protection Program. The new greenhouse gas fee would be calculated based on each permitted facility’s greenhouse gas emissions from stationary sources, and would apply to any facility that emits greenhouse gases, regardless of size.
Greenhouse gases contribute to climate change, also called global warming, by creating changes in the atmosphere. Carbon dioxide has the most significant effect because it is created in large quantities by human activities, it persists for a long time in the atmosphere, and it absorbs heat radiated from the earth’s surfaces. Unlike most compounds previously regulated as air pollutants, carbon dioxide is a concern because of global warming, but not because of toxicity issues. A second compound, methane, is more conducive to warming but is present in much smaller quantities in the atmosphere. There are a number of other compounds, including nitrous oxide and hydrofluorocarbons, which are also included in the Air District list of greenhouse gas emissions that would be considered in calculating the new fee.
The greenhouse gas fee would support the Air District’s Climate Protection Program, adopted in 2005 to address the impact of Bay Area air pollution on climate change. Climate protection activities include creating and maintaining an inventory of greenhouse gas emissions, studying emission control options to reduce greenhouse gas emissions at facilities around the region, and coordination with the California Air Resources Board as it implements AB 32, the California Global Warming Solutions Act of 2006.
Because the proceeds of the new fee — estimated at $1.1 million per year — will go to support a specific program of activities, the Air District considers it to be a cost recovery fee, not a “carbon tax.” Carbon taxes and carbon trading systems are greenhouse gas reduction mechanisms that have been used in other parts of the world and are being considered as part of the AB 32 implementation. The Air District fee, like a carbon tax, will be proportional to the contribution each facility makes to greenhouse gas emissions in the region. It will provide a ranking of that contribution and may serve as an incentive for greenhouse gas reduction by affected facilities.
The fee for each permitted facility will be based on the reported emissions during the 12-month period prior to the renewal of the permit. Each emitted greenhouse gas has been assigned a Global Warming Potential value by the Air District, which determines its carbon dioxide equivalent. The proposed fee is 4.2 cents per metric ton of carbon dioxide equivalent (see box below).
The Air District has calculated the estimated greenhouse gas fee for all permitted facilities in the region. Some fees mentioned for facilities include $186,475 per year for the Shell refinery in Martinez, with the highest greenhouse gas emissions in the Bay Area, and $44,507 for the Hanson Permanente Cement Plant in Cupertino. By contrast, small businesses would probably only have to pay a few dollars per year.
Since refineries are some of the largest greenhouse gas emitters in the region, they will pay a significant portion of the new fees. Tupper Hull, director of strategic communications for the Western States Petroleum Association, feels that the Air District fee is premature. “We haven’t seen any evidence it is coordinated in any way with the state plans for AB 32,” he noted. “Our concern is that this proposal would lead to a Balkanization of the process.”
Hull stressed that climate change is a global problem, so fees and incentives need to be applied over a broad area to offer the most options for a market-based approach to solving the problem. “California refineries are very efficient in their use of natural gas because it is a very expensive resource,” Hull said. “Reducing emissions here will be hard, so we need to look at facilities elsewhere where we can reduce emissions and get that global impact.”
The proposed fee would be added to other permit fees when the Air District revises its fee schedule. The changes would be effective July 1, making the fee the first of its type in California.
Emissions from One Gallon of Gas
The basic unit of emissions measurement in calculating the Air District’s fee would be the carbon dioxide equivalent (CDE), whereby one gram of carbon dioxide equals one gram CDE. The Air District’s calculations for Global Warming Potential sets one gram of methane at a value of 25 grams CDE, and one gram of nitrous oxide at a value of 298 grams CDE.
According to the Air District’s fee proposal, the typical emissions from burning a gallon of gasoline is 5,808 grams of carbon dioxide, 0.24 grams of methane, and 0.09 grams of nitrous oxide. Therefore, burning one gallon of gasoline creates 5,841 grams CDE (5,808 grams x 1 CDE + .24 grams x 25 CDE + .09 grams x 298 CDE = 5,841 grams CDE).
Burning 171 gallons of gasoline produces one million grams (one metric ton) of CDE, and would result in a fee of 4.2 cents.