Marginal Cost Analysis for post 2020 climate policy in doubt

By CMTA Staff

Capitol Update, June 26, 2014 Share this on FacebookTweet thisEmail this to a friend

CMTA has been working on AB 2050 (Bill Quirk, D-Hayward) to require the Air Resources Board to conduct the full range of economic assessments needed to guide post 2020 climate policies. 

We are disappointed that a marginal cost analysis is not a requirement in the bill. CMTA moved to a “neutral” position (rather than support-if-amended) when this requirement was removed. CMTA testimony in the Senate Environmental Quality Committee this week was based on the following points: 

  • If climate change is the over arching environmental imperative for the world and the legislature is serious about achieving temperature stabilization, then we should know how to get the maximum emission reductions possible for the least cost. A marginal cost analysis will show us that path. 
  • A post 2020 target could be much more strenuous than the reductions required in AB 32 for 2020. The reductions will be more expensive and will need to be adopted more quickly. The legislature needs a marginal cost analysis to make wise decisions about the appropriate targets for California. 
  • The policy and political debate about post 2020 targets will be much different than the debate in 2006. There is more awareness about reduction measures and regulations. For example, the public will soon learn how cap-and-trade increases gasoline and electricity prices. Also, the role of other states and the U.S. is becoming clear – that was a complete unknown in 2006 when AB 32 passed. A marginal cost analysis will help us all understand the tradeoffs and choices before us.

CMTA wants to avoid a post 2020 debate with only incomplete and therefore unreliable information. We will continue to push for a full-blown economic and marginal cost analysis prior to adoption of post 2020 climate policies. 

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