New York, NY, Dec. 8, 2006 — An overwhelming majority of respondents to a Cantor Fitzgerald Brokerage L.P. survey of California businesses said the best way to meet California’s greenhouse gas (GHG) reduction goal is through a cap and trade program. Ninety one percent of businesses that were surveyed said that California should develop a cap and trade program in order to meet the requirements of the Global Warming Solutions Act which was signed by Governor Schwarzenegger in September. The act requires Californians to reduce GHG emissions up to 25% by 2020.
Cap and trade is a market based policy tool that has been used to try and make environmental gains in the U.S. and Europe. A cap and trade program sets a limit on emissions, allows businesses the freedom to choose exactly how they will comply, and requires regulators to ensure that the reductions are made. This approach is different than the traditional method, which requires the government to understand and describe in detail exactly how each and every business should reduce emissions.
Over half the survey participants who are likely to be affected by the new law said the management of GHG emissions is highly important to their company, and two-thirds indicated that the law will affect their California operations.
If a market-based approach to reducing emissions is implemented, 80% of companies surveyed by Cantor believe they will reduce emissions onsite and/or buy reductions.
Respondents also estimated the value of GHG emission credits will increase significantly by 2020. On average, they thought that GHG allowances that are useable to satisfy California’s prospective requirements may cost $27 dollars/ton in 2012 and may increase to more than $39 dollars/ton in 2020.
The survey also underscored that a significant amount of uncertainty currently exists among California businesses about how the GHG law will be executed. The California Air Resources Board (CARB), which is responsible for implementing the new law, is holding a series of public hearings.
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