Governor to sign cap on emissions

By CMTA Staff

Capitol Update, Sept. 1, 2006 Share this on FacebookTweet thisEmail this to a friend

On the day before adjournment, after months of negotiations, Governor Arnold Schwarzenegger and Democratic legislative leaders announced a deal on climate change legislation, paving the way for the Governor to sign into law landmark legislation making California the first state in the nation to impose a mandatory cap on greenhouse gas (GHG) emissions.  The bill was sent to the Governor on the final night of session, with the vote divided along partisan lines.

AB 32 (Fabian Nunez, D-Los Angeles) will increase California's energy costs, make businesses less competitive, drive jobs and production out of the state, and, in all likelihood, lead to no net reduction in overall global GHG emissions.

Climate change mitigation won’t come cheap, and the economic risks of California going it alone will impact on the competitiveness of businesses for years to come. Given the link between energy use and GHG emissions, industries consuming large amounts of energy – electric power, manufacturing, refining, steel and cement production, among others – will bear the brunt of AB 32 compliance costs, further disadvantaging California manufacturers whose electricity rates already are 80 percent higher than for manufacturers in other Western states.

The bill’s California cap will significantly impact the expansion of current manufacturing in the state and lead to "leakage," the movement of production and jobs – and emissions – to other states without emissions caps, harming California’s economy and increasing GHG emissions worldwide – a lose-lose situation.

California lawmakers missed an historic opportunity to craft climate change policies that will be sustainable both near- and long-term, and at the lowest cost to the economy.  And in one fell swoop they reversed a decades-long tradition of California playing a leadership role on energy efficiency and GHG reductions.

Ongoing investment in energy efficiency, public interest research, development and demonstration (RD&D), and renewable power – funded through the public goods charge – have helped enable California to become a leader in reducing GHG emissions.  California’s carbon intensity (per capita energy usage) has held steady while increasing by 50 percent nationwide.  According to the Natural Resources Defense Council, current state policies have reduced emissions levels by more than half of what they otherwise would have been, [April 5, 2005 comments to California Energy Commission]. 

Manufacturers across California have played an integral role in reducing GHGs by voluntarily improving energy efficiency and by using combined heat-and-power systems. The cement industry, for example, has increased its energy efficiency by more than one-third since the 1970s.

This has been a matter of necessity and economic survival.  Energy is a large part of the cost of doing business for manufacturers in California. As a result, industry has become very energy efficient.

California lawmakers missed an opportunity to craft a cost-effective and balanced approach to climate change.  AB 32, and the decision to have California go it alone, first, and wrong, will prove to be a costly mistake.

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