Viewing blog posts written by Dorothy Rothrock
California’s MFG competitiveness will be well served by cap and tradePosted by Dorothy Rothrock, on May 3, 2018
Last summer’s extension of the state’s cap-and-trade program provided the best available path to protect manufacturing jobs and control the costs of meeting the state’s mandated climate change goals. The alternative, an excessively harsh command and control program, would have forced businesses to make drastic changes in their operations and would have imposed strict regulations without any flexibility in implementation.
The result would have meant increased costs to consumers and the loss of more manufacturing jobs in the state. In fact, according to CARB’s own analysis, the alternative would have resulted in increased costs across all sectors of the economy and significant increases in fuel costs to consumers. Fuel costs for the overall economy would have been 6 times higher without the deal.
Bipartisan legislative support of AB 398 ensured an improved cap-and-trade program with tax cuts, cost containment measures, and significant bureaucracy reduction that will control costs for all Californians. These elements of the cap and trade deal, fought for by Assembly Republican Leader Chad Mayes and other legislative leaders, will ease the burden of businesses working to comply with the law by preserving a market-based approach and operational flexibility.
There were only two choices last summer: draconian command and control or market-based cap-and-trade. The leaders who fought for an improved cap-and-trade program should be lauded for their courage in helping to keep manufacturing as a key component of our state’s economy.
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Cap-and-trade: A cost-effective & durable path to CA environmental goalsPosted by Dorothy Rothrock, on July 17, 2017
I penned the following for the Sacramento Bee this week on the need for cap-and-trade. California must implement the most cost-effective and durable path to reach its 2030 greenhouse gas reduction goals.
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Energy: We agree with Environmental Defense Fund -- Understand costs and benefitsPosted by Gino DiCaro, VP, Communications on Oct. 18, 2013
Affordable and reliable energy is essential to California's economy and the prosperity of our workers. Manufacturers are leading the way in investing in energy efficiency and new energy sources to help us meet future energy demands.
California manufacturers already pay 50 percent higher industrial electricity rates over the rest of the country. Because of a wide range of new energy policies, those rates are increasing for not just us but the rest of the different rate classes from top to bottom. Even our poorest will pay in both higher energy costs, as well as fewer job opportunities. It's not too late to fix this.
It's not just electricity costs of course. All of our energy needs will be more expensive over the coming months and years. The total bill is unknown. The true environmental benefits are not exact.
California can do this though. We simply need thorough analysis so we know which policies provide the biggest benefit for the least cost. This will allow us to prioritize and implement a statewide energy policy that grows our economy, meets our energy goals, and drives our environmental leadership throughout the country.
This is why the Californians for Affordable and Reliable Energy coalition took the time this week to pen the following excellent blog response to the Environmental Defense Fund (EDF) reaction to a preliminary CARE and Navigant Consulting cost assessment study. We agree with CARE and EDF! California needs more analysis to ensure our energy cost effectiveness.
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California's clean energy drive will increase pricesPosted by Gino DiCaro, VP, Communications on Aug. 20, 2013
California is a national leader in pushing renewable energy, lower greenhouse gas emissions and energy efficiency. State manufacturers have contributed to the effort by installing cost-effective technologies and instituting lean manufacturing processes to reduce their demand for electricity, natural gas and transportation fuels.
No other state’s manufacturers have done as much. But with more climate and energy policies being proposed every day, it’s time to take stock of where we are and where we are headed.
If California wants to be a model for others to follow, energy supplies must be both affordable and reliable to support a massive state economy that includes manufacturing and exporting products.
Successful California manufacturers -- who employ 1.3 million workers at an average $74,000 salary – depend on priced and reliable energy to operate in this state. They need to stay competitive with manufacturers around the country and the world.
Yesterday a group including CMTA, the Little Hoover Commission, the California Small Business Association, the California Business Roundtable, and others gathered to discuss the uncertain costs of California's programs on everyone who pays for electricity, powers a vehicle, or purchases a product in the state.
“There is not a single, credible source of analysis and data that can inform companies and policymakers regarding the cumulative costs of California’s recent energy-related policies,” said Patrick Mealoy of the Navigant Consulting group. Navigant had examined key cost drivers of three prominent California-only energy programs -- the 33 percent renewable power requirement, the carbon cap and trade auction, and the low carbon fuel standard.
Navigant’s analysis showed that the industrial community alone has dropped 17 percent of its electricity demand over the last two decades. At the same time, the residential and commercial class grew their demand by about 30 percent. In part, this means that industry is already lean and spent lots of money retrofitting facilities and finding efficiencies so they could compete with the rest of the country. Any new efficiencies could be expensive and either raise the cost of goods or cause the loss of jobs in the California economy.
This month, electricity ratepayers, including manufacturers, will see their first big rate increase due partly from the 33 percent renewable power requirement. On average it will be a two-digit percentage hike for ratepayers in the Southern California Edison territory. Industrial electricity rates are already approximately 50 percent higher than the nation. Estimates are far higher than cost of living increases into the future.
Job loss and high energy prices will be unintended consequences of our complex and overlapping clean energy goals. To avoid this outcome, lawmakers should require robust cost-benefit analysis to show how regulations can be reformed to achieve reasonable goals at the lowest possible costs.
The Little Hoover Commission might have said it best at the event, “what California really needs is a ‘timeout’ on new energy mandates.” A timeout so we fully understand what we are getting into can only help make California’s exclusivity a trailblazing success for us and others.
Most of the participants at Monday’s event were part of the simultaneous launch of the Californians for Affordable & Reliable Energy coalition (CARE) – a growing group of companies and trade associations to raise awareness about California’s escalating energy costs. List here | Join here.
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Theory meets reality on California's carbon cap-and-trade programPosted 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
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
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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