Planet Gore

Report on California’s Go-it-Alone Cap-and-Trade Plan

Who could have predicted that the state’s cap-and-trade plan would hurt California’s economy?

Sacramento – Assemblyman Dan Logue today released a copy of an evaluation conducted at his request by the state’s Legislative Analyst’s Office (LAO), which reviewed possible economic consequences of California implementing AB 32 in the absence of similar actions elsewhere in the nation.

“The LAO’s most recent analysis clearly indicates that California’s go-it-alone approach to global warming policy will have serious consequences for our state’s jobs, businesses and economy,” said Mr. Logue.  “It also identifies critical deficiencies in the California Air Resources Board’s (ARB) evaluation of the costs of AB 32 in the context of ‘leakage,’ or loss, of jobs and economic activity to other states.”

“With California struggling with over 2.3 million unemployed, a multi-billion dollar budget deficit and ongoing economic crisis, the LAO’s comments call into renewed question the wisdom of moving ahead with billions of dollars in increased energy costs and job losses that will put our state at an even greater competitive disadvantage,” concluded Logue.  “The only fiscally responsible option here is to send ARB back to the drawing board to conduct a more objective, comprehensive evaluation before condemning California to further economic hardship with no impact on global warming.”

Principle findings of the LAO’s analysis include:

· “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 is in large part because such policies will tend to raise the state’s relative prices for energy, such as electricity.”

· “This in turn 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.”

· “Despite the potential importance of leakage, ARB’s evaluation of economic leakage within its economic analysis of the [AB 32 Scoping Plan] is deficient.”

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