California’s air quality regulators today announced their intentions to give away millions of dollars of carbon dioxide permits, voicing a concern that a carbon crack down might drive business out of state.

This is a stunning admission from California’s Air Resources Board, the agency responsible for implementing 2006’s AB 32. AB 32, the so-called Global Warming Solutions Act, is a law forcing California to return to 1990 levels of CO2 emissions (disclosure: I argued against and voted against the bill as a California lawmaker). The admission is stunning, because only two years ago, the regulatory bureaucracy was claiming, with a straight face, that implementing AB 32 would actually create 2 million jobs, presumably created by people selling each other solar panels made in China.

It is instructive to note that Europe went down the same path when they realized that making energy more expensive puts people out of work. What happened was predictable: carbon emissions weren’t reduced by cap-and-trade, rather, the government gave well-connected interests more valuable credits, allowing them to operate as before. Government got more power while the powerful gained a competitive advantage over those who were less favored-cap-and-trade simply becoming another avenue for the picking of winners and losers by government, rather than the marketplace.

The fact is, that if fully and honestly implemented, AB 32 will cost the average California family $2,500 per year-money that could be used for a variety of alternative purposes, such as a sending a child to college.