Comment Log Display

I am not opposed to a well-designed cap-and-trade program as an
element of California’s greenhouse gas emissions reduction
strategy.  However, I have significant concerns that the rule
currently contemplated by the California Air Resources Board is a
poorly designed policy that will increase energy costs and lead to
leakage of businesses, jobs and economic activity.  This directly
contradicts not only the requirement under AB 32 that such
regulations must minimize negative economic impacts but the
Governor and Legislature’s stated goal of preserving and creating
jobs as the most important means of fueling our state’s economic
recovery.

Specifically:  

California cannot afford to go it alone. CARB’s AB 32 Scoping Plan
observes that “California cannot avert the impacts of global
climate change by acting alone,” and anticipates a regional
cap-and-trade program in coordination with states in the Western
Climate Initiative.  However, no other states in the WCI are
pursuing cap-and-trade policies, nor is the federal government. 
California would be going it alone, to the severe detriment of our
competitiveness and economy.

The independent Legislative Analyst’s Office concluded last year: 
“California’s economy at large will likely be adversely affected in
the near term by implementing climate-related policies that are not
adopted elsewhere … this … will adversely impact the state’s
economy through such avenues as causing the prices of goods and
services to rise; lowering business profits; and reducing
production, income, and jobs.  These adverse effects will occur in
large part through economic leakage, as certain economic activity
locates or relocates outside of California where regulatory-related
costs are lower.”

With the second-highest unemployment rate in the nation, California
simply can’t afford to go it alone on cap-and trade.

Arbitrary 10% “haircut” is an unjustified, job-killing tax.  By
forcing trade-exposed industries to purchase up to 10% of emissions
allowances, CARB will be in effect imposing a new tax on regulated
entities. In additional to being legally questionable, this tax
will lead to dramatically higher energy costs that will harm
virtually every sector of our economy.     

CARB staff has been quoted as estimating the amount of this tax
will start at $500 million in the first compliance period and grow
to $2 billion in subsequent periods.  I respectfully disagree with
your opinion that putting a multi-billion dollar tax on carbon will
send the price signals necessary for a successful cap-and-trade
program.  On the contrary, such an approach will be successful only
in killing jobs, driving more businesses out of California and
exporting GHG emissions to unregulated regions.

No environmental benefit.  Singling out trade-exposed industries by
depriving them of the free allowances which are essential to a
California-only cap-and-trade program will do nothing to achieve
meaningful GHG reductions. The Analysis Group recently cautioned
CARB:  “With none of California’s neighboring states committing to
climate targets, emission leakage will continue as a potential risk
to the program’s environmental integrity.”

California ratepayers and businesses are already facing the burden
of higher utility costs associated with existing laws and
regulations mandating a transition to lower-carbon and renewable
energy sources.  In view of the fragile state of California’s
economy, this is the worst possible time to impose yet another new
energy tax on struggling businesses and consumers, especially since
not even the other Western Climate Initiative states are willing to
risk their own economies on costly cap-and-trade programs.

In summary, the imposition of a new tax on business or other “price
signals” are not necessary to achieve the emissions reduction goals
of AB 32, and will serve only to further cripple our economy,
increase unemployment and impair our competitiveness.  

I strongly oppose such taxes in any form, and urge you to modify
the cap-and-trade program to avoid the economic consequences they
will bring.