CalChamber, Coalition Call for Comprehensive Economic Analysis
(November 10, 2008) The California Chamber of Commerce and a coalition representing 170 business organizations have expressed concern about the billions of dollars in increased costs that would result from a proposed climate change plan recently released by the California Air Resources Board (ARB).
In a press release, the CalChamber and coalition said there are better, less costly ways to reduce greenhouse gas emissions—especially in these difficult economic times—than are proposed in the Scoping Plan released on October 15.
“The scoping plan will add to the worsening economic problems facing California companies and families,” said Shelly Sullivan, executive director of the coalition, known as the AB 32 Implementation Group. “Why not give consumers a break by adopting a well-designed cap-and-trade program that reduces the cost of cutting greenhouse gas emissions?”
Market mechanisms such as a cap-and-trade program give companies the ability to reduce emissions at the lowest cost, either on site or through the purchase of offsets.
Scoping Plan
The scoping plan, to be considered by the ARB for approval on December 11, contains the main strategies California will use to reduce greenhouse gases as it implements AB 32, the landmark climate change legislation enacted in 2006.
Greenhouse gas reduction actions outlined in the proposed scoping plan include direct regulations, alternative compliance mechanisms, monetary and non-monetary incentives, voluntary actions, and market-based mechanisms, such as a cap-and-trade system.
Although the scoping plan provides that some of the reductions could be achieved by a Western Region trading system, the plan has opted for a high-cost “auction” method for the cap-and-trade system. Such a program would act as a multibillion-dollar tax increase on energy providers, leading to higher gasoline and electricity costs for consumers.
“The last thing California companies need in this challenging economic climate is billions in more taxes,” said Amisha Patel, CalChamber policy advocate and co-chair of the AB 32 Implementation Group. “California is already one of the highest tax states in the country.”
Faulty Analysis
The ARB staff asserts that the scoping plan will save consumers money, but that analysis incorporates anticipated cost savings from existing laws to promote vehicle fuel efficiency, independent of AB 32.
Relying on projected savings from the fuel efficiency law already in place hides the reality that measures in the scoping plan—according to ARB estimates—will cause electricity rates to increase by 11 percent and natural gas rates by 8 percent. In addition, according to ARB, gasoline costs would increase $11 billion a year under the plan.
The AB 32 Implementation Group has submitted an 18-page critique of the ARB’s economic analysis of the scoping plan and has called on the agency to correct major errors that led to its conclusions.
Before the plan is implemented, the ARB should conduct a more comprehensive economic analysis that determines the cost of the state’s climate change plan to California companies and consumers, the coalition states.
Economic Concerns in Europe
“Even the European Union has amended its climate policies before they become binding to require more comprehensive cost-effectiveness studies because many countries feared the EU’s climate plan would be too expensive, cause economic turmoil and would increase unemployment,” Patel said.
“You have to question why European countries believe the EU Plan will result in economic turmoil and lost jobs for a 20 percent greenhouse gas emission reduction while the Air Board staff asserts California’s plan, which requires a nearly 30 percent greenhouse gas emission reduction, won’t cost a penny,” she said.
The ARB introduced the greenhouse gas reduction measures proposed in the scoping plan through four workshops conducted between November 30, 2007 and April 17, 2008. A draft scoping plan was released for public review and comment on June 26, followed by more workshops in July and August.
The AB 32 Implementation Group is a coalition working for a climate change strategy that achieves real greenhouse gas emissions in a balanced, cost-effective way. More information is available at the coalition website, www.ab32ig.com.
Staff Contact: Amisha Patel