Cap & Trade at CARB

By CMTA Staff

Capitol Update, Dec. 11, 2009 Share this on FacebookTweet thisEmail this to a friend

On December 11, the Economic and Allocation Advisory Committee (EAAC) of the California Air Resources Board (CARB) met by phone to discuss their draft report on the agency’s cap-and-trade program proposal. This program is of great importance not just to manufacturers, but to California’s economy, which is why CMTA has been aggressively working with EAAC to include additional suggestions in their final report to CARB.

While there are many, the fundamental concern is the lack of a firm foundation of credible economic analysis to support the cap-and-trade design. It’s absence is hampering the work and efforts of EAAC and is slowing the process of creating a reliable cap-and-trade program that will work for California. As a result, the alternative design elements, allocation strategies and revenue distribution options are being debated in a vacuum.  Policymakers cannot understand the cost and benefit trade-offs of the options currently under consideration.  This is a dangerous way to make decisions impacting the California economy.

We encourage CARB to recognize that the success of a cap depends on the ability to keep manufacturing and other large energy users within California to avoid leaking jobs and emissions elsewhere. Since leakage would undermine the environmental and economic purpose of the program, it should be the first issue fully understood and resolved prior to making other design element decisions.  CARB needs to immediately establish the criteria for determining at-risk industries, describe how the magnitude of the risk will be measured, and propose options for minimizing those risks. 

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