State Climate Strategy Hits a Sustainability Snag

3060242318_80122bcff7_m.jpgIs AB-32 sustainable? The state’s Legislative Analyst seems to think it’s a valid question.

A series of reports from the Legislative Analyst’s Office (California’s version of the federal GAO) casts doubt on the long-term viability of the nation’s most ambitious attack on climate change.

Just as the Governor was tuning up for his Climate Summit last week, the LAO released a report questioning the economics of California’s Global Warming Solutions Act, aka AB-32. The report assails the assumptions and projections made by the Air Resources Board, in estimating the effect of AB-32’s implementation on the state’s economy. The board’s “scoping plan” projects net annual savings of $16 billion.

Among the LAO’s conclusions:

- The [ARB] plan’s evaluation of the costs and savings of some recommended measures is inconsistent and incomplete. The plan does not reflect the costs and savings of all of the emissions reduction measures that it recommends.

- Macroeconomic modeling results show a slight net economic benefit to the plan, but ARB failed to demonstrate the analytical rigor of its findings. Despite its findings—slight, eventual overall benefit to the economy—the macroeconomic analysis conducted by ARB provides little insight.

- The findings are highly dependent upon key assumptions, and ARB has not performed an analysis to determine how sensitive the macroeconomic findings are to changes in the key assumptions.

- The plan fails to lay out an “investment pathway.” Despite its prediction of eventual net economic benefit, the scoping plan fails to lay out an investment pathway to reach its goals for GHG emissions levels in 2020.

The LAO found that the lion’s share of the economic benefit from AB-32 is presumed to spring from one emissions control measure, that’s actually part of a separate law (AB 1493, passed in 2002). According to the analysis, implementation of the “Pavley regulations” would account for 18% of the greenhouse gas reductions and 70% of savings and benefits attributed to AB-32 in the air board’s scoping plan. That plan is likely scheduled for formal sign-off by the board in the next few weeks.

The report was not widely distributed but was contained in a letter to Assemblyman Roger Niello (R-Sacramento), who requested the analysis.

All the angst over economic impact of AB-32 may be moot, given the findings of another recent LAO study, which warned that we may not be able to put the darn thing into effect, anyway. The state is presently keeping the program alive by borrowing tens of millions of dollars from the California Beverage Container Recycling Fund. The LAO says the Schwarzenegger administration “has failed to produce a sustainable, long-term funding plan for AB-32 implementation.”

 

  • http://www.asinglefootstep.com Shawn Moriarty

    Great piece, and I wanted to add that the issue I see as the main problem is that we have economists trying to solve ecological issues. An we continue to try and find better and better band aids to solve the problem rather than addressing the initial design of our systems. If our politicians, economists, environmentalists, and scientists would stop for a moment and take a breath before acting and trying to get the most press and improve their image, we might get somewhere. In first responder training the first thing you learn to do when approaching an accident scene is to stop and take a breath before going in. Everyone needs to take a step back, breath and then approach our designs, not look for better bandages.

  • R. Cooper

    ” The [ARB] plan’s evaluation of the costs and savings of some recommended measures is inconsistent and incomplete. The plan does not reflect the costs and savings of all of the emissions reduction measures that it recommends.”

    The politicians in Sac. don’t care a whit about what it really does because it really a tax measure. The carbon cap and trade programs turns the electric, manufactories,etc into tax collectors for the state. It’s just a tax scheme.!! run by the CARB. Once the gov. get’s into the elect rates they’ll always remain high and never will go down, just like any other state taxs.

  • Craig Miller

    Of course, many these days are openly advocating “carbon taxes” of all sorts. In his current book, “Hot, Flat and Crowded,” Tom Friedman supports a federal floor price for gas and oil, to make renewable sources of energy more competitive and create a stable environment for investment in them. Back east, the first auction of carbon emission credits in the US (among northeastern utilities) netted about $40 million for public investment in clean energy. Is this necessarily a bad thing?