Owners of one of Lodi’s largest employers are worried that state requirements geared toward reducing carbon emissions and global warming could put a financial strain on their business and eventually even lead to layoffs.
Pacific Coast Producers, which is based in Lodi, is concerned about having to participate in the cap-and-trade portion of the California Global Warming Solutions Act.
Assembly Bill 32 requires companies to make their businesses more energy-efficient or buy allowances for the carbon dioxide they produce.
The allowances will be sold through an auction to businesses that cannot or will not make improvements.
Pacific Coast Producers has four plants throughout the Central Valley, but the Woodland plant is the only one that exceeds the allowable amount of carbon dioxide, vice president Mona Shulman said.
Because Pacific Coast Producers use steam boilers that run on natural gas, she said there are few alternatives to reduce emissions, so they will have to buy allowances.
Shulman is concerned that the price of the allowances will add an extra cost, which will eventually trickle down to the price of their fruits and vegetables.
With competitors in the Midwest and internationally, Shulman said, it places the company at a disadvantage.
“Price is important. Pennies and nickels make a difference,” she said. “If we cannot remain competitive, we’d have to reduce production or find other ways to cut costs to make up for this.”
Proponents of AB 32, which passed in 2006, say the cap-and-trade program helps incentivize companies to make energy-efficient changes.
The California Air Resources Board is managing the cap-and-trade program, and Richard Corey, a top official, testified at a hearing that the goal is to keep costs down for businesses.
“Six full-scale analyses have been conducted and found that the cap-and-trade program will have nearly imperceptible impact on the California economy as it continues to grow to 2020,” Corey said.
But Lodi City Councilman Alan Nakanishi, who voted against the global warming act, said he is still worried about the effects of the bill on businesses throughout the state, such as Pacific Coast Producers.
“I always thought it was going to increase the number of businesses moving away from California. Jobs are going to be lost,” he said.
Nakanishi spoke at a California Manufacturers and Technology Association press conference on Wednesday in Stockton. The organization released a 23-page report detailing the impact the legislation will have on California food processors.
The study estimated that Pacific Coast Producers will spend $2.5 million between now and 2020 and then $1.4 million in annual costs by 2020, to comply with the regulations.
The bulk of the money will come from $1.2 million in direct cap-and-trade costs, according to the report. More than $100,000 will come from an expected increase in natural gas prices because gas brokers will have to purchase allowances, Shulman said.
Pacific Coast Producers will likely have to purchase the allowances because they upgraded their system shortly before the state started monitoring the emissions, which makes it hard to reduce emissions with new technology, Shulman said.
There are also currently no renewable energy alternatives that the business could afford that would reduce the company’s emissions, she said.
“I’m not going to say that we are 100-percent efficient, but we are pretty efficient. We will do what we can to improve, but we are talking about a 5 percent increase in efficiencies,” she said.
Because Pacific Coast Producers is a small company, the expenses could lead to layoffs, Shulman said.
She would like to see Pacific Coast Producers and other food processors receive free allowances as opposed to penalties.
“We are continuing our campaign to show the air board, the governor and the Legislature that you are adding costs that our competitors won’t have to our industry, which is based in the Central Valley, where there is high unemployment and not a lot of manufacturing,” Shulman said.
The company has suggested other options rather than a cap-and-trade program.
The state could require the business to hold its emissions at current levels and not increase them, Shulman said.
Another option is mandating a certain percentage of the company’s yearly budget going to install energy-efficiency technology, she said.
Nakanishi said he feels like the bill is over-regulation and should be delayed, especially when companies are already struggling.
“We are in a recession. Unemployment is too high. It’s too soon to implement it,” he said.
The Sacramento Bee contributed to this report.