California Residents Will Receive Carbon Dividends

People that live in California are about to start receiving a share of the state’s proceeds from its historic cap-and-trade program – a Climate Dividend.

Every six months, all residential utility customers will see a credit on their account for $20-$40, after the California Public Utilities Commission (CPUC) unanimously approved the climate dividend in mid-December.

From 2013-2020, ratepayers will receive a total of $5.7 billion to $22.6 billion, reports the San Jose Mercury News.

The dividends, which will being appearing on utility bills in July, are intended to offset potential price increases for goods and services that stem from cap-and-trade. Power plants and other large-scale industrial polluters now must pay to emit greenhouse gases or invest in carbon credits to offset them.

"It’s a way to compensate households for the fact that the price of milk might go up at the corner store and that the price of gas will go up," Scott Murtishaw, an energy adviser to CPUC told the San Jose Mercury News.

The state held its first cap-and-trade auction in November, selling 23 million allowances for $10.09 each (slightly above the minimum) and raising about $290 million in revenue.

Polluters received 90% of carbon permits for free, but have to buy credits if they exceed the carbon cap. Utilities got free permits for the first year but had to agree to sell them in the auction.

"This sets an important precedent. It’s the first time in the history of cap-and-trade where the value of allowances are flowing back to households," Michael Peevey, CPUC President  told the San Jose Mercury News.

"We are supportive of the proposal," says Joe Como of the CPUC’s Division of Ratepayer Advocates. "It appears to strike a good balance between supporting a carbon market and minimizing the cost burden to residential and small business customers."

For more about California’s cap-and-trade system:

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