Los Angeles Launches Carbon Reduction Surcharge Dedicated for Renewable Investment

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Yesterday the Mayor of Los Angeles unveiled a proposal for a Carbon Reduction Surcharge to raise an estimated $170 million a year to be placed into a Renewable Energy and Efficiency Trust Fund set aside to provide dedicated revenue for renewable energy and efficiency investment. The trust fund will specifically invest in two types of programs: energy efficiency and a solar feed-in tariff.


The dedicated carbon tax will cost Los Angeles residents $2.50-$3.50 extra on their monthly Los Angeles Water & Power bill. The arrangement has the approval of a large coalition of business, labor, and environmental leaders who worked out an unprecedented level of transparency and accountability to disburse the funds by the Board of  Commissioners. Chip in a few dollars a month to help support independent cleantech coverage that helps to accelerate the cleantech revolution!

Small businesses would be eligible for $2,500 worth of free energy-efficiency upgrades in lighting, paid by the carbon surcharge – which would lower energy costs up to 25% to offset the higher (20%) increase in small business bills: an average of $54.

In addition, the new solar Feed-in-tariff would pay both residents and businesses for their generated electricity – in the area of California that boasts some of the nation’s best solar insolation in the USA, and where big box buildings for distributed  solar power is in demand by utilities.

Says Mayor Antonio Villaraigosa:

“Because the price of energy has been rising, our Water and Power department needs a significant rate increase to keep the lights on and to get out of a financial hole. But raising rates only to continue to invest in dirty fossil fuels that we know are only going to become more scarce and more expensive makes no sense.”

By assigning the rate raise to a lock-box to provide dedicated revenue for green energy, the Mayor is creating a new, very direct form of a cap and trade carbon tax.

The funding created is expected to generate 18,000 green energy jobs over ten years. Renewable energy is the fastest-growing employment sector in California with 36% green jobs growth, providing the only bright spot in California’s employment data.

Villaraigosa is correct as envisaging this as a long-term solution to energy costs, because once renewable energy sources like wind and solar and geothermal power are paid for, rates can indeed go down, because renewable energy has free fuel.

An example is the Island of Alameda next to Oakland in Northern California. Decades ago, it locked in a supply of geothermal energy from The Geysers, and its electricity rates are now lower than those of its neighbors.

Under the pending AB32 cap and trade supported by one potential next governor (Attorney General Jerry Brown) and opposed by the fossil industry groups backing the other (Meg Whitman)  if LADWP does nothing – it would otherwise have to pay carbon fines starting at $300 million a year, doubling to $600 million a year.

This would have a much less concentrated return as local green job benefits, because the benefit would be spread throughout the state.

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Image: SunPower and Light

Source: Huffington Post

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