Waiting for economic analysis of state climate change plan

By CMTA Staff

Capitol Update, Aug. 15, 2008 Share this on FacebookTweet thisEmail this to a friend

The California Air Resources Board issued a Draft Scoping Plan for AB 32 on June 26, 2008. The plan describes many regulatory measures, estimates of their costs and suggestions for a market approach to help meet the targets under AB 32. CARB has not yet completed an economic analysis of the scoping plan – it should be released later this month.

CMTA is disappointed and concerned that the plan is not yet supported by an economic analysis that justifies its recommendations. Because of this shortcoming, and the likely high costs of many of the approaches, there is risk of serious economic damage if we proceed down the path outlined in the plan.

The costs of AB 32 will impact all aspects of our economy and lives of all Californians. Without the most cost-effective and technologically feasible approaches, consumers and employers will suffer:

    • higher electricity costs,
    • higher fuel costs,
    • higher vehicle costs,
    • higher housing costs,
    • higher food and product costs, and
    • higher taxes and fees.
Recommendations in the plan would make costs higher than necessary:

• The plan relies heavily on command and control regulations, not taking full advantage of market mechanisms to achieve the most cost effective emission reductions. Markets would stimulate technological innovation, reliably reduce emissions and lower compliance costs.

• Only 20 percent of the reductions in the plan would be achieved through the most cost-effective market mechanisms.

• The plan imposes an arbitrary 10 percent limit on the use of offsets, taking many cost-effective reductions off the table.

• Most measures in the plan are assumed to be low or zero cost based on long term assumptions. CARB should describe how much measures will cost in the near term (3 to 5 years) to give policymakers the information they need to build a roadmap to achieve lowest cost implementation strategies.
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