Their message: Don't be nervous, but don't expect a government handout, either.
Businesses have some reason to be nervous, even though many backed California's first-in-the-nation effort to curb greenhouse gas emissions: Companies and utilities pay nothing today to dump into the atmosphere carbon dioxide and other contributors to global warming.
Under the "cap-and-trade" scheme practiced by the United Kingdom and being contemplated in California, every ton of released carbon would carry a cost.
"It's great you're prepared to put your money where your mouth is," Martin Uden, Britain's San Francisco-based Consulate General, quipped to a room full of not-quite-smiling members of the Bay Area Council, which represents the region's major industries.
California air regulators are mulling what a state carbon-trading market would look like — how many emitters to regulate, how tightly to begin cutting back on the carbon pollution being traded and whether to give or sell those pollution rights away in the beginning.
The Democratic takeover of Congress puts proponents of action on global warming in charge of key committees and makes it likelier that the rest of the nation is headed for carbon trading. Sen. Barbara Boxer, incoming chair of the Senate
For five years, Britain has run a voluntary emissions trading program, part of a larger European Union effort to comply with emissions reductions outlined in the 1997 Kyoto Protocol, which the U.S. never ratified.
British carbon-polluting companies — power utilities, foundries, glass and cement kilns, for example — get an allowance for each ton of carbon dioxide sent up the smokestack. Use less, and excess allowance can be sold on an open market. Use more, and it must be bought.
Such a market-based approach to curbing pollution was pioneered in the United States years ago to limit acid rain and smog on the East Coast. Europe adapted it for the much larger carbon emissions market, and now Americans are trying to catch up.
"The whole point of emissions trading is that we're not the experts," said Martin Nesbit, head of National Climate Change Policy for Britain's Department of Environment, Food and Rural Affairs. "You take action so reduction of greenhouse gas becomes an economic opportunity for your company."
The big question confronting Europe and California alike is how to issue allowances. The answer is worth a lot of money. In Europe, the carbon market in 2005 was worth about $10 billion. Economists say a similar market in the United States could be worth $60 billion.
To start this market, does government give allowances to industry based on past emissions estimates, providing both a taxpayer subsidy for cutting costs and temptation to cheat in emissions reporting? Or do regulators auction allowances to the highest bidder and let companies buy what they need?
Some business leaders prefer an "incentive." But experience in Britain over the past five years, said Nesbit and his group, has made clear an auction offers the most straightforward and efficient approach.
So far, Britain has given away its allowances, and Ireland is the only European nation to hold an auction. The Brits say they'll soon start selling allowances, as long as they are not alone.
Most economists agree that putting a price on carbon makes energy more expensive, and since energy is an element in the price of virtually every good and service then those prices also would rise. And that's the point of a carbon market — to drive a search for efficiencies and new technologies to lower the amount of fossil energy consumed in producing a good or service.
In a global market where only a few governments are capping carbon emissions, there is a risk of impairing a national or state economy as business and jobs go elsewhere. On the other hand, several economists say technology economies such as those in Ireland and California could experience a net benefit of more new jobs and new business.
"We would like to ultimately move to a full auction," said Jill Duggan, who lead the team that developed Britain's trading scheme. "UK industry used to look a bit scared when I said that, but they're getting used to it."
"We're not in favor of incentives," she added. "The incentive is that emissions trading is the least costly compared to the alternatives."
Businesses already have enough incentive anyway, according to Hunter Lovins, an efficiency and sustainable development guru and president of Natural Capitalism Inc. Every industry that looks for energy savings finds it and ends up making money as well as improving shareholder value, she said.
"It's better for jobs, it's better for security and it gives you more vibrant communities," Lovins said.
Contact Douglas Fischer at dfischer@angnewspapers.com or at (510) 208-6425.