Declaring that there are better, less costly ways to reduce greenhouse gas emissions especially in these difficult economic times, the California Chamber of Commerce and a coalition representing 165 business organizations expressed concern about the billions of dollars of increased energy costs that would result from a climate change plan recently released by the California Air Resources Board (ARB).

The AB 32 Scoping Plan contains the main strategies California will use to reduce the greenhouse gases (GHG) that cause climate change. The Scoping Plan has a range of GHG reduction actions which include direct regulations, alternative compliance mechanisms, monetary and non-monetary incentives, voluntary actions, and market-based mechanisms such as a cap-and-trade system. These measures have been introduced through four workshops between November 30, 2007 and April 17. A draft Scoping Plan was released for public review and comment on June 26 followed by more workshops in July and August, 2008. 

The ARB staff asserts that the plan will save consumers money, but their analysis relies on existing laws to promote vehicle fuel efficiency which are already on the books, independent of AB 32. The cost savings anticipated by the legislation, hides the reality that other measures in the Scoping Plan will cause electricity rates to increase by 11 percent, natural gas rates by 8 percent. Additionally, gasoline costs would go up by $11 billion a year under the plan.

“The Scoping Plan will add to the worsening economic problems facing California companies and families,” said Shelly Sullivan, executive director of the AB 32 Implementation Group. “Why not give consumers a break by adopting a well-designed cap-and-trade program that reduces the cost of cutting greenhouse gas emissions?”
Market mechanisms such as a cap-and-trade program give companies the ability to reduce emissions at the lowest cost, either on site or through the purchase of offsets.

The Scoping Plan provides that some of the reductions could be achieved by a western region trading system, but unfortunately has opted for a high cost “auction” method for the cap-and-trade system. Such a program would act as a multi-billion dollar tax increase on energy providers, leading to higher gasoline and electricity costs for consumers.

“The last thing California companies need in this challenging economic climate is billions in more taxes,” said Amisha Patel, policy advocate for the California Chamber of Commerce. “California is already one of the highest tax states in the country.”

The AB 32 Implementation Group is a coalition of 175 business organizations working for a climate change strategy that achieves real greenhouse gas emissions in a balanced, cost-effective way.

The Proposed Scoping Plan was released on October 15 and will be considered for approval at the ARB hearing on December 11.

For more information visit, www.ab32ig.com.

Reprinted with permission from the California Chamber of Commerce.