SACRAMENTO – Large campuses in the University of California and California State University systems are bracing for the implementation of new state rules that will force them to cut carbon emissions or pay as much as $28 million a year to offset their greenhouse gases.
For years, businesspeople have been complaining that the Global Warming Solutions Act of 2006, also known as Assembly Bill 32, will decimate California’s economy and force companies to move out of state. The program, which will go into effect on Jan. 1, 2013, sets a gradually shrinking cap on emissions by the state’s biggest polluters while also establishing a market for carbon credits, which will be initially distributed through an auction and free handouts to many emitters.
At this point, no one knows what the going rate for carbon credits will be because the market hasn’t been established yet. But assuming a cost of $10 to $40 per credit, several public campuses could face multi-million dollar bills.
In the UC system, five campuses and one medical center emit enough greenhouse gases to qualify for the cap-and-trade program, according to the Legislative Analyst’s Office. For UCLA, the cost of compliance is estimated to be between $2.1 million and $8.4 million annually, according to UC system estimates. For UC San Diego, it’s between $1.6 million and $6.2 million. For UC Irvine, $718,000 to $2.9 million.
In all, the UC system is expecting compliance costs of $6.3 million to $25 million – for the time being. Three other campuses – UC Santa Cruz, UC Santa Barbara and UC Riverside – may eventually fall under the cap-and-trade program as well as their emissions rise, according to the UC system.
In the CSU system, two campuses are expected to be affected: San Diego and San Jose, according to the California Air Resources Board, also known as CARB. Using the same the methodology employed by the UC system, the Orange County Register calculated the estimated compliance costs for the two campuses, assuming $10 to $40 per credit. For San Diego State University, it was $502,000 to $2 million. For San Jose State University, it was $297,000 to $1.2 million.
“We should not be saddling our institutions of higher learning with yet more costs that could be avoided,” said Senate Republican Leader Bob Huff of Diamond Bar, whose district includes part of Orange County.
Cap and trade is one of the key strategies California officials intend to use to reduce the state’s greenhouse gas emissions to 1990 levels by 2020, as mandated by the Global Warming Solutions Act.
It’s a complex scheme where as the cap shrinks so does the number of credits. Businesses or other entities that want to continue emitting greenhouse gases have the option to do so, they just have to pony up the money for additional credits, which, over time, will rise in value on the open market as their numbers dwindle.
It’s hoped that the system will provide a financial incentive for heavy industries and other big businesses to invest in cleaner technologies. But for public universities struggling under the state’s budget problems, the calculus isn’t quite the same. They don’t have a lot of room to make big capitol investments at the moment.
Officials for both the UC and CSU systems say their institutions support reducing greenhouse gas emissions — but they have also pushed for legislative or regulatory changes that would relieve some of the financial burden of complying with the law.
“The University supports the creation of a greenhouse gas cap-and-trade program, but is concerned that it is being disproportionately impacted by the proposed cap-and-trade rule and that its compliance costs will ultimately be borne by students, researchers, and patients to the detriment of teaching, research, and healthcare activities,” wrote Anthony Garvin of the UC Office of the president in a 2010 letter to the California Air Resources Board, the entity responsible for implementing AB 32.
“Since 2008-09, the University has lost over $1 billion in State funding,” said UC spokeswoman Brooke Converse in an email. “On top of these absolute cuts, the University has had to address significant rising costs to the tune of about $350 million a year that the State would normally have funded. No amount of preparation for the AB 32 obligations could be adequate under these circumstances.”
Two private universities, Loma Linda University and the California Institute of Technology, also emit enough greenhouse gases to fall under cap and trade regulations, according to the California Air Resources Board.
The board is aware of the issues facing public universities and could make some changes to address their situation, if it’s found to be warranted, said spokesman Dave Clegern.
“The universities are somebody we want to make sure they can handle what we’re sending them,” he said.
Contact the writer: 916-449-6046 or bjoseph@ocregister.com
