LOS ANGELES Corporations in California are challenging the states greenhouse gas cap-and-trade auctions.
The California Chamber of Commerce said it has filed a lawsuit in state superior court seeking to invalidate the states first cap-and-trade auction for carbon dioxide emissions earlier this month, arguing that the California Environmental Protection Agencys Air Resources Board (ARB) exceeded the authority it was granted under greenhouse gas legislation passed in 2006.
An ARB spokesman in Sacramento said the agency is confident its cap-and-trade program "will withstand any legal challenge."
The auctions are due to take place every three months. The first auction resulted in an average price of $10.09 per tonne, slightly more than the $10-per-ton minimum set by the ARB. The individual companies participating in the auction werent identified for "proprietary and business-sensitive" reasons, the spokesman said.
But an earlier list of carbon-dioxide emitters in California indicated that two of the states three steel producersUSS-Posco Industries Inc., Pittsburg, and California Steel Industries Inc., Fontanaare covered by the laws requirements, which apply to companies that emit more than 25,000 tonnes of carbon dioxide per year.
USS-Posco said it decided to "sit out" the first auction until it becomes clearer how the program will develop. In the meantime, the company, which converts hot-rolled coil produced outside into flat-rolled and tin mill products, emphasized that it will continue to work on projects that reduce energy consumption and greenhouse gas emissions.
A spokesman for California Steel couldnt be reached for comment.
While the overwhelming majority of companies that emit more than 25,000 tonnes of carbon dioxide annually are in the energy or utility sectors, business organizations have claimed that higher costs resulting from cap-and-trade requirements will raise the cost of business for all firms in the state.
James Simonelli, executive director of the California Metals Coalition, which represents producers, smelters and recyclers, said his group is concerned that the greenhouse gas legislation will evolve into a "California-only law that further restricts the competitiveness" of metal firms in the state. He agrees with the California Chamber of Commerce that the credits should be distributed by the state for free.
California Metal-X Inc. (CMX), a brass and bronze ingot manufacturer, smelter and recycler within two miles of downtown Los Angeles, is not included on the emissions list, but company president Tim Strelitz believes the cap-and-trade regulations would probably have a "huge" impact on the industry
Strelitz said that the California regulatory climate will eventually force the states energy-intensive manufacturing industries to either move to alternative energy technologies, leave the state or shut down their businesses. He said CMX is looking to pursue the first option by switching to an undisclosed new technology that would put it "completely off the grid," utilizing cogeneration that would result in significantly lower emissions of both carbon dioxide and nitrogen oxides.