James WestEvery year at the Pacific Coast Producers processing plant in Woodland, California, half a million tons of tomatoes are sliced, diced, canned, boiled, and shipped to grocery stores nationwide. The operation is driven by steam, lots of it, which comes from a suite of massive natural-gas-powered boilers. Together, these boilers emit over 25,000 metric tons (about 27,557 US tons) of greenhouse gases annually, which means PCP will be forced to join California's cap-and-trade carbon market, set to kick off in November.
The plan, which officials hope will put the country's most populous state on track to cut greenhouse gas emissions 80 percent by 2050, isn't the first carbon trading scheme in the United States: The Regional Greenhouse Gas Initiative, a collective of several Northeastern states (including Massachusetts, which rejoined a few years after being forced out by then-Gov. Mitt Romney), has been auctioning carbon credits, called allowances, since 2008. But unlike RGGI, which applies only to power plants, California's plan extends to all sectors of the economy, which means businesses from paper mills, oil refineries, and universities to pharmaceutical manufacturers, steel mills, and food processors like PCP will have a stake in California's campaign against climate change.
Yesterday, some 150 of those businesses got their first taste, as the curtain lifted on a dress rehearsal of the auction where companies will bid for the allowances (each worth one metric ton of carbon) that determine how much they're allowed to emit, a dry run staged to let companies get comfortable with the system and work out any kinks before it launches for real in a few months. Over the next year, about 150 allowances will be bid on, together worth anywhere from $550 million to $1 billion depending on market forces. Some will be given away for free, to help businesses adjust to the added expense.
"It's like some brave new adventure," said Mona Schulman, a PCP vice president, as she waited for the fall of the digital gavel (the auction is held online) to start bidding. "Everybody's in favor of clean air and the environment being healthy, but there's a lot of uncertainty down the road."
Barring an unforeseen advancement in steam boiler technology, Schulman said, the plant will have limited options for reducing emissions; as the cap gets lower every year, they'll be left with the tough choice of having to cut production, or shell out to other companies for their unused allowances.