October 16, 2008
Thomas Pyle – 202.621.2952

CARB’s AB 32 Scoping Plan Will Cripple California’s Economy While not Helping the Environment

Washington, DCThe California Air Resources Board (CARB) released its Scoping Plan for AB 32, the “California Global Warming Solutions Act of 2006,” calling for a reduction in greenhouse gas emissions in California to 1990 levels by 2020.  The plan is essentially a statewide “cap and trade” program, in which the state legislature will issue permits entitling the owner to emit a certain amount of greenhouse gases. By shrinking the number of permits over time, the state will reduce California emissions. Robert Murphy, economist at the Institute for Energy Research, released the following statement on CARB’s AB 32 Scoping Plan.

“AB 32 calls for drastic emission cuts, further hurting consumers and businesses in California.  First among the numerous problems with this program is the cost to California business. Government is discouraging the use of the most economical and reliable energies, raising the cost of doing business in California.  The technologies required for industry to profitably operate at such low emission levels do not yet exist—the goal is unrealistic. The subtleties and intricacies of such a program hide the detrimental effect—a stealth tax. Convinced that they can hide the damage, CARB has released an additional report, the Economic Supplement, which claims AB 32 will actually boost the economy it threatens.

There can be no doubt that penalizing carbon use will harm the economy. By its nature, this will force companies to operate less efficiently. Costs will increase and output will decrease.  While CARB claims that businesses could actually be more productive and profitable under the plan, the very fact that it must be mandated demonstrates that businesses disagree. Government, unlike business, is simply happy to ignore costs to suit a theoretical benefit. Ordinary Californians, however, will be unable to ignore the rise in prices and the decrease in jobs this plan would inevitably produce.

California’s pioneering nature will be a detriment in this case. AB 32 will simply motivate companies to move to other states, which do not punish productivity. This takes jobs—and valuable tax revenue—out of California, and will produce very little reduction in global emissions.”

To read the Institute’s full analysis, click here.

The Institute for Energy Research (IER) is a not-for-profit organization that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society.

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