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No need for carbon auction says California's most independent voice

Posted by Gino DiCaro, VP, Communications on Aug. 24, 2012

This week the most independent voice in California policy analysis said the following in a letter: a cap-and-trade "allowance auction is not necessary to meet the AB 32 goal of reducing GHG emissions statewide to 1990 levels by 2020."

The impartial Legislative Analyst (LAO) responded in a decisive letter to Sen. Henry Perea who had asked three formal, basic and highly appropriate questions:

  • Is a cap and trade allowance auction necessary?  
  • What are the advantages and disadvantages? 
  • What are the steps the California Legislature would have to take to stop the November auction?

The LAO's four-page response outlined that the advantages of 100 percent free allocation (up to the cap) far outweigh the disadvantages and that "it would significantly offset more of the marginal cost increase."  

In a state where a manufacturer's operating costs are already more than 20 percent higher than the rest of the country, including 50 percent higher electricity rates, that's a very big deal.

The LAO concluded that, should the legislature choose to go this route, they simply need to direct the California Air Resources Board in statute to freely allocate allowances before its planned auction this November.

Dear Legislature. Please HELP!

Time is running out.  Billions of dollars are at stake over the next eight years.  Will California turn AB 32 implementation into a government money-grab without regard for our economy or the plausibility of the country following us on greenhouse gas reductions?  Or will the state see that everyone's goals are in fact achieved with a free allocation of credits?

Manufacturers are growing outside of California.  If the state sticks with its plan to charge for a majority of the carbon allowances and make California an even less competitive place to manufacture, the original bold and economy-cautious AB 32 greenhouse gas plan from 2006 will have morphed into a cash cow for government and an insurmountable burden for many of our leading employers.

 

You can read the LAO letter here

You can read Sen. Henry Perea's release here.





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Theory meets reality on California's carbon cap-and-trade program

Posted by Gino DiCaro, VP, Communications on Aug. 16, 2012

Theory met reality on Tuesday at a Senate informational hearing on California's carbon cap-and-trade program that is set to start with an auction in November 2012. Craig Anderson from Solar Turbines, an industrial gas turbine manufacturer with 4,000 employees in San Diego, testified that the soon-to-be-fully-implemented cap-and-trade program is the most significant threat to his company's growth.

"I can say without hesitation that AB 32 is viewed by our company leaders as not only the most significant environmental regulation we have faced in California, but also the greatest threat to the growth of our business in California," said Anderson.

You can view Anderson's full testimony here (5:45 min).

Following are more real world impacts from employer testimony on Tuesday. These are companies that, as you'll see in their video remarks, are already some of the cleanest and most efficient in the world.

Mona Schuman with Pacific Coast Producers

"Our costs over the life of this program will be at a minimum $1.5 million to $2 million dollars."

"If cost of allowances go to high for us, our option is to reduce production. Reducing production means reducing jobs, reducing our growers crops and all the suppliers and vendors that supply our growers. "

View testimony here (5:49)

Ryan Modlin with Owens-Illinois

"It costs us 30 percent more already for us to do business in California than anywhere else in the United States. Under this program, it will add a couple million dollars at $20 per ton."

View testimony here (8:49)

Rob Joyce with Guardian Industries

"Compliance costs associated with cap-and-trade regulation will likely erode the competitiveness of flat glass manufacturers in California without providing a meaningful incentive to reduce greenhouse gas emissions."

View testimony here (7:49)

Key questioning and testimony also came from Sen. Rod Wright (Committee chairman), Sen. Michael Rubio, Sen. Bob Dutton, LAO's Tiffany Roberts, CMTA's Dorothy Rothrock, Insulation Manufacturers' Angus Crane, WSPA's Cathy Reheis-Boyd, NFIB's John Kabateck, CLFP's John Larrea, and a Gallo glass worker and representative. (click names for video).

Collectively the hearing's appeal to the California Air Resources Board was to freely allocate emission allowances up to the cap, for all industries, for all eight years of the program. There is no reason to do otherwise. California will still reach its goals and companies will still be forced to reduce to their capped benchmark. (Here is a chart to show how the current auction will charge the food processing industry beyond the cap over the next eight years).

The cap-and-trade concerns reached far beyond employers and workers this month too. The Federal Energy Regulatory Commissioner Philip Moeller wrote a letter last week to Gov. Jerry Brown asking him to

“suspend enforcement of the prohibition of resource shuffling until such a time that ARB clarifies rules surrounding compliance with, and enforcement of, the provisions. Suggested guidance documents are not sufficient, as these do not provide the certainty needed by market participants."

“I am now, however, extremely concerned about the potential disruption to California's electricity market that may arise from the California Air Resources Board's (ARB) implementation of California's greenhouse gas trading plan...."

View the complete letter here.

It's now CARB's turn, before it is too late, to get realistic about making this program work for California's economy and environment.





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California will lose a net 262,000 jobs by 2020 from existing climate change policies

Posted by Gino DiCaro, VP, Communications on July 18, 2012

family costs

source: Fiscal and Economic Impact of the California Global Warming Solutions Act of 2006

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California's economy will take on $35 billion in direct costs annually by 2020 from existing climate change policies

Posted by Gino DiCaro, VP, Communications on July 18, 2012

family costs

source: Fiscal and Economic Impact of the California Global Warming Solutions Act of 2006

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California families will incur $3,400 in costs and earnings loss by 2020 for existing climate change policies

Posted by Gino DiCaro, VP, Communications on July 18, 2012

family costs

source: Fiscal and Economic Impact of the California Global Warming Solutions Act of 2006

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