Gino DiCaro

CMTA makes pointed comments on Global Warming ‘Scoping plan’

By Gino DiCaro, VP, Communications

Capitol Update, Aug. 8, 2008 Share this on FacebookTweet thisEmail this to a friend

CMTA is posting comments on the draft scoping plan for AB 32, California’s landmark legislation to reduce greenhouse gas emissions to 1990 levels by 2020.  The introductory paragraphs are below.
    CMTA represents large and small California manufacturers in a variety of industries – chemical, steel, energy, automobile, food products, aerospace, computer technologies, biotechnology and more. California manufacturers employ 1.5 million citizens and support another 3 million jobs in the general economy, the highest multiplier of any economic sector. The California economy depends on a healthy manufacturing sector.

     AB 32 poses a huge challenge for manufacturers. To achieve the required reductions, the state will impose regulations that are likely to raise compliance and operating costs on many manufacturing inputs – transportation fuels, electricity, and natural gas are the most obvious examples.  In addition, direct regulations and/or a cap and trade program that auctions emission allowances would impose significantly more costs on the manufacturing sector.  There would be upward pressure on wages through cost of living increases and more expensive housing for employees.

    The combined impact could be serious because California costs of doing business are already very high – nearly 23% above the national average.  To maintain their competitive position, California manufacturers have become very energy efficient and require highly skilled and productive employees.  As a result, energy use (and related emissions) in many industries has been essentially flat since 1990 while production has increased.  Manufacturers continue to implement energy efficiency programs in light of ever increasing energy costs.  And due to California cost pressures and growth in worldwide manufacturing, the scoping plan projects that emissions from industry will not appreciably grow between now and the year 2020.

    Manufacturing in the 21st century is particularly vulnerable to new cost pressures.  The world is flat - supply chains, technologies and destinations for final products now span the globe. Many California plants belong to a network of facilities held by a common owner with the flexibility to build at new sites and/or shift production between locations. California companies must compete with their own sister plants as well as other manufacturers on cost and quality. If they lose, we lose.

    Keeping California manufacturing strong will support the economy and meet emission reduction targets by avoiding leakage of emissions and jobs to other states and regions.  Thanks for considering the following comments on the scoping plan to achieve these goals of AB 32.

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