Industry takes critical look at cap-and-trade

With time short before California rings the bell on its own carbon market, this is an appeal directly to our state’s regulatory leadership.




Do what you said you would do if the evidence was clear that California’s “cap-and-trade” program is not ready to roll out later this month.


At minimum, slow down and listen. If you don’t want to believe the reports or the hordes of other experts that are saying California is not ready for a cap-and-trade auction, at least listen to your own experts.


In a recent Sacramento Bee article, Elizabeth M. Bailey and Frank Wolak, University of California, Berkeley and Stanford energy economics experts respectively, and members of the California Air Resources Board (CARB) Emissions Market Assessment Committee – THE group advising CARB on its the cap-and-trade auction – said state regulators are “kidding” themselves if they think a California only cap-and-trade will provide any substantial environmental benefits.


What is more concerning, these same experts say that cap-and-trade “is likely to impose significant costs on the California economy with no compensating environmental or economic benefits.”

They argue – as have expert after ignored expert – that cap-and-trade programs only provide the desired environmental and economic benefits when done on a much larger geographic scale than just one state, even one as big and economically powerful as California.

If CARB continues down this path, California will auction its jobs away for an environmental benefit that will be “swamped” by an annual increase in greenhouse gas emissions by China by nearly 20-1. That is a pretty poor “exchange rate” for our state and nation, one that business and industry will not hang around to accept with Texas, Nevada and other states calling. Studies by business organizations have pointed out that the initial auction could require up to $3 billion in payments to California merely for the right to continue doing business in the state.

If this sounds familiar, it should. California’s non-partisan Legislative Analyst’s Office (LAO) also concluded the CARB’s auction will be costly and not necessary for the state to achieve the greenhouse gas emission reduction goals established by AB 32.

The LAO, their own committee members, studies from other experts . . . what more does CARB leadership need to act on its word to postpone the auction if there was evidence that it was not properly designed or ready?


If CARB continues to choose to ignore its experts, maybe it is time for our Governor to step in and act.

Ed’s Note: Catherine Reheis-Boyd is President of the Western States Petroleum Association.



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