LOS ANGELES (CBSLA.com) — Business leaders from Southern California and statewide are voicing strong opposition to a landmark cap-and-trade auction program that took effect on Wednesday.

KNX 1070’s Bob Brill reports the California Chamber of Commerce filed an eleventh-hour lawsuit challenging the validity of the system on the eve of the first pollution permit auction.

The lawsuit (PDF) filed in the state Superior Court challenges the California Air Resource Board’s authority under the 2006 climate change law that sells so-called “allowances” for the purpose of generating revenue for the state.

Under the program, carbon emissions from individual polluters are capped, while businesses are required to keep emissions under the cap or buy allowances or ‘carbon credits’ from those that pollute less.

Supporters say the law – which originated with state Assembly Bill 32 in 2006 aimed at eliminating heat-trapping gasses – could potentially yield about $1 billion from the sale of allowances in fiscal year 2012-13.

State Air Resources Board spokesman Dave Clegern said the cap on greenhouse emissions will get progressively lower in an effort to drastically reduce greenhouse gas emissions by 2050.

“By the end of the program in 2020, it should have reduced emissions by about 17 percent in the sectors involved,” Clegern said.

But despite any potential environmental gains, Loren Kaye with the California Chamber of Commerce is concerned that taxes generated by the program will make companies less profitable.

“The cap-and-trade tax, which we believe is not authorized by the law, could raise some $70 billion for California businesses,” Kaye said.

State officials estimated approximately 23 million allowances will be sold for 2013 emissions, and 39.5 million allowances are being pre-sold Wednesday for 2015 emissions.

While there remain lingering questions as to how the money will be used, California law dictates it go into a special greenhouse gas reduction account, and any programs that use the funds be consistent with the AB32’s goals.

(©2012 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. Wire services contributed to this report.)


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