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  • It’s Time to Terminate California’s Cap and Trade System

    California legislators passed a statewide cap and trade bill in 2006 that is set to begin in 2012, but a growing opposition is seeking to include a ballot measure that would postpone a carbon cap until the state’s economy recovers:

    “The ballot measure would bar the state from implementing the law until its jobless rate stabilized at or below 5.5% for a year, which supporters say would signal the return of a strong economy. The state’s jobless rate topped 5.5% in October 2007 and now stands at 12.5%.

    Supporters and opponents of the law disagree about its potential economic effects. The California Air Resources Board, the state clean-air agency administering the law, says the cap would help the economy. It would raise the price of a unit of energy, but reduce Californians’ total energy bills through greater efficiency, the board says, freeing up money that would lead to more jobs.

    But the board has scaled back its optimism. In a 2008 study, it projected the measure would produce a net gain of more than 100,000 California jobs. Economists widely criticized that study as too rosy. A second economic assessment, released by the board in March, projects a net gain of about 10,000 jobs. A June 2009 study by a group of California small businesses, however, predicted the law could raise the average California household’s annual housing, transportation, energy and food costs by about $3,900, or 15%.”

    The increased recognition that cap and trade reduces economic activity is encouraging but the ballot measure does not go far enough. Delaying implementation of cap and trade will only delay the economic consequences of higher energy prices. The pill may be easier to swallow but that doesn’t make it good policy. The fact that cap and trade only makes sense if the state is not in a recession is indicative that the policy is an economy killer.

    Heritage analysis of the federal cap and trade bill passed in the House of Representatives found that beginning in 2012, job losses will be 192,773 higher than without a cap-and-trade bill in place. And the number of jobs lost will only go up, increasing to 285,335 by 2035. And the environmental benefit? Climatologist Chip Knappenberger projected that Waxman-Markey would moderate temperatures by only hundredths of a degree in 2050 and no more than two-tenths of a degree Celsius at the end of the century. If California tries to cap CO2 emissions by itself, the economic costs will come with even smaller environmental benefits – too small to even measure.

    Contrary to the claims of an economic boost from green investment and green job creation and “postage stamp” costs, cap and trade does the complete opposite by increasing energy prices-thereby causing a considerable reduction in economic growth, household incomes, and employment. A more prudent ballot measure would be to remove California’s cap and trade plan completely.

    Posted in Energy [slideshow_deploy]

    5 Responses to It’s Time to Terminate California’s Cap and Trade System

    1. Leon, Durango, CO says:

      When Global Cooling finally happens we can all look back in horror at how the Democrats were 180 degrees wrong and we are really heading for an Ice Age. They will say "If only we had a robust economy we could turn the tide, but now it is too late. We can no longer afford to melt the ice."

      "It was that darn George Bush!"

    2. Tom, California says:

      Nick, many would agree that the ballot initiative does not go far enough, but please keep in mind that this is California and the politically possible is, in this instance, preferable to the theoretically perfect but unattainable. In otehr words don't let the perfect be the enemy of the good. In any re-direction (say repeal of the existing ab32) one must first of all stop momentum in the old direction…simple physics applies to political momentum as well. If we can all get the over-the-cliff momentum stopped first, we may have a rational discussion in California (hey, I'm a native and remain eternally optimistic.)

    3. Tom, California says:

      by the way, there are literaly hudreds of regulations that are part of AB 32 besides cap and trade.

    4. Mark, Placerville CA says:


      Great summary of AB 32. Tom your comments on how to get to a "rational discussion" on the subject were spot on!! My wife and I went solar 4 years ago due to the 5 Tier electrical pricing the PUC approved for residential customers (our marginal electrical price (300% of baseline usage) was 22 cents back in 2006 from PG&E- today the price for that marginal kw is up to about 50 cents).

      As you are likely aware Tom many of our public agencies (Modesto Irrigation District, El Dorado Irrigation District, LA ) are trying to deal with the State mandate for 33% renewables for the generation of electricity by 2020. Noted below are a couple of references on LA's issues. It is past time for a rational discussion on why the renewables mandate excludes electrical generators from counting the electricity from large hydro facilities.

      In 2006 Californians paid 60% more then the national average for utilities. By now I am fairly sure we are up over 100% more then citizens of other states pay. The NUMI plants closure was partly/mostly due to the high costs of doing business in this state. We are still going to buy cars. Unfortunately, we have priced our selves out of the market to have them made in the state.



    5. LD, California says:

      Cap and Trade is taxation without representation in combination with JB's tax initiative is enslavement policy. The Neos want your wonderful state for their Rex, Prince Charles of Wales and 3G economic elite, just the middle class, poor, and handicapped are in the way.

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