California Board Approves Anti-Global Warming Plan

Published February 1, 2009

The California Air Resources Board has set a powerful regulatory force in motion by approving an outline for meeting the carbon dioxide reductions required by a state law aimed at combating global warming.

The outline, known as a “scoping plan,” is required by the Global Warming Solutions Act of 2006. It addresses every economic activity in the state—from oil production to wine-making to where people live and work.

The board (known as CARB) will now move to design and implement individual sector regulations.

The general public and energy analysts, including CARB’s own peer reviewers, are expressing strong objections to the move to increase regulations in the state, which many see as already overburdened by government restrictions and mandates on private activities.

Emission Reduction Strategies

The goal of the Global Warming Solutions Act is to reduce greenhouse gas emissions in California to 1990 levels by 2020, and by 80 percent by 2050.

The measure, passed as AB 32 in 2006, gave CARB broad and extraordinary authority to impose and enforce measures to force reductions in emissions of carbon dioxide and other gases believed to contribute to global warming.

The scoping plan’s components include energy efficiency mandates, clean-car standards, increases in renewable power use, and a low-carbon fuel standard. It also anticipates deployment of solar-power subsidies, high-speed rail, water-related energy efficiency measures, and a range of regulations to reduce emissions from trucks and from ships docked in California ports.

CARB expects to fund the plan through fees on greenhouse gas emitters.

Public Not Happy

The plan was preceded by an 18-month-long public process with scores of workshops and public meetings and hundreds of people testifying before the board. CARB staff received more than 43,000 individual comments, and more than a quarter-million copies of the plan were viewed or downloaded from CARB’s Web site.

Almost every participant—from business to community leaders—had something critical to say.

Perhaps most interesting is the unanimous condemnation of the board’s economic analysis by its own selected peer reviewers.

All six economists selected by CARB to peer review the analysis found it deeply flawed. Several said the state “handpicked” data to improve the economic case for the proposed plan.

Reviewers Lambast CARB Claims

CARB released its economic analysis in September, three months after releasing its mix of measures for implementing the legislation. CARB projected the planned policies would increase gross state economic product by $4 billion in 2020, to $2.59 trillion, compared to $2.586 trillion if no emission reductions were undertaken.

In response to a request from members of the California legislature, the independent Legislative Analyst’s Office evaluated the economic analysis underpinning the scoping plan. The LAO said, among other things, “The plan’s evaluation of the costs and savings is inconsistent and incomplete.

“The plan does not reflect the costs and savings of all of the emissions reduction measures that it recommends. This is because, in some cases, [CARB] has intentionally excluded the costs and savings associated with certain measures, such as the ‘million solar roofs’ program,” LAO wrote. That means the plan does not comply with existing law requiring it to minimize cost and for CARB to evaluate total potential costs.

‘Terribly Deficient’

“Unfortunately, the Economic Analysis Supplement, in its current form, gives the appearance of justifying the chosen package of regulatory measures rather than evaluating it or looking at policy options,” wrote peer reviewers Janet Peace and Liwayway Adkins of the Pew Center on Global Climate Change, a left-leaning think tank, in written comments to CARB.

“I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the state government or the public for the purpose of assessing the likely costs of CARB’s plans,” Robert Stavins of Harvard’s Kennedy School of Government wrote in his peer review comments.

Because the state did not compare the chosen course of action to alternative approaches, “it is absolutely impossible to use the present economic analysis to determine whether CARB’s Scoping Plan represents a truly cost-effective means of reducing California’s contribution to greenhouse gas concentrations in the atmosphere,” Stavins added.

The state systematically underestimated costs and overstated benefits, Stavins wrote. “The economic analysis selectively includes or excludes various existing non-AB 32 policies in its baseline precisely in ways that lead systematically to underestimating the cost of the Scoping Plan,” he wrote.

James Duran of the California Hispanic Chambers of Commerce told CARB in oral comments, “This plan is an economic train wreck waiting to happen.” It would cause financial hardship to minority-owned companies, he added.

Media, Legislators Retort

The San Diego Union Tribune responded to CARB’s plan with a scathing editorial on December 11, stating, “In California, the people formulating climate-change policy have been rigorously dishonest, consistently insisting that this wrenching transition will be painless. For one example, the CARB says that any action by a business that reduces greenhouse gas emissions is automatically ‘cost-effective’—meaning going out of business is therefore cost effective.”

Critical details of the cap-and-trade program still have to be hammered out, including whether the state will issue carbon offsets to industries or businesses will be forced to buy them.

State Sen. Robert Dutton (R-Rancho Cucamonga) stated on his Web site, CARB’s “decision to move ahead despite the current economic crisis, despite a flawed analysis, and knowing full well that their results will not be achieved demands a legislative response.”

Tom Tanton ([email protected]) is a senior fellow at the Pacific Research Institute.