Rubber? Meet Road.

Loren Kaye

President of the California Foundation for Commerce and Education


One of the most important policy debates of the decade is about to commence in California – several years after the policy was enacted.

Yesterday, the Air Resources Board released the Climate Change Draft Scoping Plan, the most important document to date discussing implementation of California’s landmark Global Warming Solutions Act of 2006. While labeled a “discussion draft,” it begins to lay out the nuts and bolts of how the Schwarzenegger Administration would have Californians reduce greenhouse gas emissions.

The document still only hints at the costs involved:

“ARB has developed preliminary estimates of the costs and savings of the various measures considered in this Draft Plan. These estimates indicated that the overall savings from improved efficiency and developing alternatives to petroleum will, on the whole, outweigh the costs. This balance is largely driven by current high energy costs and the degree to which measures increase energy efficiency throughout the economy and move California toward ultimately cheaper alternatives to fossil fuels.”

The cost and savings information have not yet been released by the Board, and even what will be released is advertised as “preliminary and does not reflect all the measures under evaluation.” The Board promises supplemental economic evaluations later this summer.

The Board is not so reticent to advertise its vision of the consequences of no action:

“The potential costs of implementing the Plan pale beside the cost of doing nothing. Looking globally (citing a UK study) … the overall costs and risks of climate change will be equivalent of losing at least five percent of global GDP each year, now and forever” or possibly up to 20 percent of GDP.

The rubber will meet the road when these economic analyses are released and can be evaluated according to their assumptions on costs, benefits valuation, discount rates, and sensitivity analyses. None of these economic questions were thoughtfully addressed during the debate on AB 32, and to date none of the presumed benefits have been shown to accrue directly to California as a result of these actions.

Therefore, the new documentation released over the next several months will provide the first opportunity to truly assess the cost to California consumers, ratepayers and taxpayers for our leadership in the climate change debate.

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