Study: Western Climate Plan Would Prolong the Recession

Published May 1, 2009

A climate action plan under development by states participating in the Western Climate Initiative would deepen and prolong the current recession in the Western states by substantially raising energy prices, concludes a new study by Management Information Services, a highly regarded economic analysis firm that conducts studies for both renewable and conventional energy organizations.

The study, commissioned by the Western Business Roundtable, finds the Western Climate Initiative (WCI) cap-and-trade plan could “chase away tens of billions of dollars in high-technology investment from the West to other regions” and would “further stress the West’s already strained electricity grid, increasing the threat of potentially catastrophic power outages.”

WCI was launched in February 2007 and includes seven states—Arizona, California, Montana, New Mexico, Oregon, Utah, and Washington—and four Canadian provinces. WCI programs are still being formulated.

“The key to creating new jobs while reducing emissions is not to throttle back our economic engine but to turbo-charge it with new technologies that allow it to run faster, cleaner, and more efficiently,” said Jim Sims, president and CEO of the Western Business Roundtable, in a February 18 press statement.

“The analysis we commissioned predicts that the WCI would disadvantage the West by limiting energy resources and discouraging deployment of new technologies that can help us grow to a more low-carbon economy,” Sims said. “On the contrary, the West needs all the resources we can develop in order to power our way out of this recession and create millions of new high-paying jobs. We need a climate action plan that helps our economy grow while we continue to reduce emissions through cutting-edge, twenty-first century technologies.”

The most troubling aspect of the restrictions, Sims says, is WCI’s assumption that western states can meet projections of sharp increases in energy demand without approving new baseline (always available) power generation.

Simply encouraging energy efficiency and subsidizing intermittent power sources such as solar and wind power “would weaken the West’s already overburdened high-voltage transmission grid and could easily deepen or lengthen our economic recession,” said Sims.

James M. Taylor ([email protected]) is a senior fellow of The Heartland Institute and managing editor of Environment & Climate News.