By DOROTHY ROTHROCK and DOMINIC DIMARE
ssembly Bill 32, the Global Warming Solutions Act, requires California to cut greenhouse gas emissions to 1990 levels by 2020.
This is a full 25% reduction in emissions. It is important that we achieve this ambitious goal in a way that protects consumers and grows the economy.
Most man-made greenhouse gas emissions result from burning fossil fuels in our automobiles, factories and homes. Accomplishing the 25% greenhouse gas reduction without slowing down our economy will require innovation and creativity that engages both the private and public sector.
This should be a different approach from sole reliance on a “command and control” regulatory scheme typically imposed by government on business.
Instead, California should unleash the power of the marketplace to achieve emission reductions. That’s the vision Gov. Arnold Schwarzenegger has for California,to grow California’s economy through innovation in green technologies spurred by market forces encouraging the reduction of greenhouse gas emissions. Market-based systems to reduce emissions even have been supported by former vice president Al Gore.
The European Union, for one, has encountered difficulties in its efforts to curb greenhouse gas emissions. And some systems have tried and failed here in the U.S.
One approach that would hurt California is under consideration,requiring businesses to buy, through an “auction,” the right to emit and thus raise money for government to use for emission reduction purposes (yet to be determined).
This would be like a tax. It is true that the tax would put pressure on California businesses to reduce their emissions. But this tax would not be paid by competitors in other states or countries. As a result, production here would become more expensive and California products would be more costly and less desirable to consumers.
This would hurt California jobs and undermine the emission reduction goal of AB 32 by causing greenhouse gas emissions to increase in other countries producing those less expensive products. This “leakage” potential has been identified as the most troubling aspect of California’s decision to cap its own greenhouse gas emissions.
There is no environmental benefit to inadvertently moving greenhouse gas emissions to other locations through well-intentioned yet ill-conceived policies that add burden to California businesses.
Market-based solutions have worked when tackling similar problems. The Environmental Protection Agency’s program to reduce sulfur dioxide emissions led to substantial declines in emissions. That success is due in part to reasonable compliance costs and compliance flexibility.
Another program in the Northeast and Mid-Atlantic states began as a summertime program to reduce smog. The program succeeded because it tailored rules to account for emission characteristics.
Our coalition, the AB 32 Implementation Group, has developed a set of principles to help establish a market-based system for reducing greenhouse gas emissions that will protect California jobs:
– The program must be easy to implement, equitable and cost-effective.
– The program must stimulate investment in technologies for emission reduction and carbon sequestration.
– The program must protect California jobs and reveal the true cost of emission reduction to consumers.
– The program must identify and track “early warning” indicators to prevent significant harm to California’s economy and jobs.
– The program must achieve actual greenhouse gas emission reductions and not lead to leakage.
– The program, to the extent practical, must cover all greenhouse gas emissions and sources.
California is committed to being a world leader in reducing greenhouse gases. The business community will be a partner to achieve this goal. We encourage policymakers to adopt a sensible market-based approach that will keep jobs in the state, grow new technologies and cost-effectively reduce greenhouse gas emissions.
Rothrock is vice president of the California Manufacturers & Technology Association. DiMare is vice president of the California Chamber of Commerce.
