Another view: ARB twisted cap-and-trade into a job killer

by Jack Stewart
April 15, 2012
The line is now forming for those who want a say in how to spend billions of dollars from the Assembly Bill 32 cap-and-trade program.

But first, how is this revenue "created"? For the answer, look in the mirror. Every consumer, public agency, manufacturer and small business will be paying higher prices for electricity, natural gas, gasoline and other products to fill the coffers of cap-and-trade as designed by the California Air Resources Board.

This isn't what legislators intended when they voted for AB 32. The Air Resources Board has turned what could have been an effective and reasonable environmental program into an energy tax machine that will threaten the California economy for years to come. How we came to this dangerous point deserves a closer look.

In 2006 the state's manufacturers were justifiably alarmed when California decided to lead the nation with a mandate for lower statewide greenhouse gas emissions. Energy costs in the state had been among the highest in the nation for decades, and industry had already embraced state of the art energy efficiency technologies to lower their bills.

For this reason we supported the good idea to give companies flexibility to achieve the targets at the lowest possible cost, and so did the Legislature.

A well-designed cap-and-trade program would put a cap on total statewide emissions and allow regulated companies to trade emission rights, or credits, among themselves. Some companies would be able to reduce their energy use immediately and sell credits they didn't need to other companies who couldn't make immediate reductions. Everyone could stay in business while ARB ensured that statewide emissions declined to the target level set for 2020.

Too bad this is not what the Air Resources Board did. Instead of the low-cost program envisioned by legislators, ARB decided to withhold credits and turn cap-and-trade into a moneymaker by becoming a player in the market.

Withholding credits for auction is not necessary to achieve AB 32 goals. Attracting green jobs and technology development does not depend on this policy. It is also probably illegal for the Air Resources Board to raise this revenue given its very limited authority under AB 32. Nevertheless, pending a successful lawsuit, companies must plan for the costs coming down upon them.

With higher California-only costs looming, is it any wonder that the state ranks second-lowest in new manufacturing investment per capita over the last five years?

If manufacturing is growing everywhere but California, our emissions will be lower but that's little consolation for California workers. Other states will not follow our lead if jobs and the California economy suffer from our burdensome program?

Like fool's gold used to trick unwary buyers, the Air Resource Board's cap-and-trade revenues will come at too high a price for California jobs and economic growth.

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