Nothing focuses the mind like being told by a thesis adviser (or a judge) that your analysis is inadequate and that your degree (or your carefully constructed policy for reducing greenhouse gas emissions) will be on hold until you provide a better one.

The regulatory staff at California’s Air Resources Board has been at work on a revision for months, since a Superior Court judge in San Francisco revealed his desire for a better analysis and then ordered the regulators to provide one. The working product was unveiled on Monday, starting the clock for a 45-day public-comment period.

Included in the analysis was the chart above, which summarizes how different approaches to controlling emissions are expected to score on 20 different yardsticks. By this reckoning, a cap-and-trade strategy, the market-based emissions trading system that the air resources board has already embraced, still scores highest. A hybrid approach combining elements of both a cap-and-trade system and a carbon fee is a close second.

What Judge Ernest H. Goldsmith called for was a fuller discussion of the comparative merits of a cap-and-trade system, which the board had embraced, and a direct tax or fee on emissions of carbon dioxide or other greenhouse gases, an approach favored by several leading economists.


The 116-page document looked at the following four alternatives for enforcing California’s 2006 law to control greenhouse gases, widely known as AB32: relying only on existing laws and policies (the so-called “no action” alternative), directly regulating polluting industries, imposing a carbon fee or tax, and using the cap-and-trade approach. It also provided a discussion of British Columbia’s plan, a blend of these policies.

The staff’s final judgment was that a market-based approach easily outdistanced a direct emissions tax or fee. Even the unpopular option of direct regulation of refineries or power plants or other major emitters penciled out better than the carbon tax in the new analysis of the regulatory board.

The board’s analysts wrote that carbon fees or taxes were “a potentially effective strategy for reducing greenhouse-gas initiatives.” Still, “administrative challenges and legal constraints exist for fees and taxes in California that could constrain the Air Resources Board’s ability to implement such a proposal,” they said.

The analysts were referring to California’s requirement that any tax increase either win the support of voters in a statewide referendum or pass the legislature by a two-thirds majority.

Another objection to carbon taxes offered by the analysts was that polluting businesses would pull up stakes in California and resume business elsewhere, so there would be no net emissions reductions — something known in policy-wonk circles as “leakage.”

By FELICITY BARRINGER