Mindful of the so-called "leakage" effect - the prospect of companies leaving California to escape the costs - the California Air Resources Board is looking to tweak the system.
One likely solution is to give more free carbon credits to companies deemed at risk. The total amount of credits available each year wouldn't increase - it would still fall 2 percent to 3 percent a year - but a greater percentage of them would be handed out for free. This would save some companies millions of dollars a year, although the extra freebies wouldn't kick in until 2015.
The ARB says it believes the extra carbon allowances would strike a balance between businesses' needs and the environment.
"Obviously we don't want industry to leave the state, but we want them to meet the emissions requirements," said air board spokesman David Clegern.
That's a circle that cannot be squared. The idea that you can increase the cost of doing business in the state without expecting to see any commensurate drop-off in production tells you just how far down the rabbit hole California's political class has gone. The ship of state having voluntarily taken a torpedo to the hull, they're now reaching for Band-Aids.
To be sure, some relief (no matter how inadequate) is preferable to none. But there's much to be suspicious of in this 'solution.' If enacted, it would allow the administrative state to handpick those who will be excused from the worst consequences of this gargantuan experiment in industrial policy. That would cement the criticism that many of us who opposed California's cap and trade plan have leveled from the start: that yielding power of this scope to government is an open invitation for crony capitalism in which personal connections supersede the principle of equality before the law.
Were that the only demerit of cap and trade, it would still be worth opposing. The fact, however, that it accompanies so much potential for economic damage makes the case irrefutable.