Economy:

Center for Resource Solutions' Busch discusses new analysis of Calif. climate plan

As the cost of a national cap-and-trade system is debated in Washington, California has had a head start with its own version of a climate plan. During today's OnPoint, Chris Busch, policy director at the Center for Resource Solutions, discusses conflicting reports on the economic impacts of California's plan. He also addresses how a federal cap-and-trade system will affect California's progress on emissions reduction.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Chris Busch, policy director at the Center for Resource Solutions. Chris, thanks for coming on the show.

Chris Busch: Thanks for having me, Monica.

Monica Trauzzi: Chris, as the cost of a national cap and trade is being debated in Washington, California has had a head start with AB32, which is your state's version of climate legislation. There have been conflicting reports about the economic impacts of AB32 and one of the more recent reports found that this law would bring on job losses and economic disruption. So, can a policy such as AB32 be implemented without seeing those negative impacts to the economy?

Chris Busch: Absolutely and I think you're referring to a recent study by Sanjay Varshney of Cal State University and, you know, really, that study has been pretty roundly rejected as not reliable. It doesn't even include the one single benefit that the macroeconomic modeling typically considers, that is the value of energy savings. So, I think there's a great potential for energy efficiency to make clean energy and climate policy very affordable.

Monica Trauzzi: What evidence, concrete evidence, can you offer to disprove the concerns that are discussed in that report?

Chris Busch: Well, for example, California has been growing the economy and reducing pollution for many years and California has experienced positive economic effects from our energy efficiency efforts. For example, a University of California study found over the past 20 years that there's been about 1.5 million jobs added to the state's economy due to our efforts in improving energy efficiency, which is a core climate solution. So, that's one area. There's also the impressive job growth. Pew Center has found green jobs have been growing at a 9.1 percent rate, about triple the average for the economy as whole. So, there's a couple of examples for you.

Monica Trauzzi: So the California Air Resources Board has developed a state level economic modeling program. Can that program be used on a national level? I mean can we extrapolate the findings to the federal level?

Chris Busch: Well, this report that we're just releasing today actually shows that there is a lot of agreements between the studies that have been done in the California context and the U.S. context and they're using similar modeling methods, the same type of macroeconomic model, so there are some similarities. I mean, basically, the message coming out of those models and those results are very similar that growth is going to continue to be robust and these models, which are not comprehensive cost-benefit models, they are really just models of cost considering this one benefit energy saving. So they're not considering all the energy security, national security, public health benefits of action. They're showing these very small affects and there's agreement between the California results and the national results on that account.

Monica Trauzzi: You've been working with the CARB on the implementation of AB32, what are some of the key challenges that you've come across?

Chris Busch: The key challenges, I think, well it's going to be a challenge getting everyone to agree on the best approach. I think we need to continue to develop innovative financing strategies to enable these investments to go forward. I think helping engage all the citizens in this effort, even though most people, for example under a cap-and-trade program are not going to be regulated, but everyone needs to pitch in and put us on this new trajectory.

Monica Trauzzi: How will a federal policy, with the targets that are currently being discussed in Congress, impact California's efforts to reduce emissions?

Chris Busch: Well, of course, it's going to depend on how the final legislation looks, but as it appears now, it appears that the cap-and-trade element of California's current plan would be taken over by the federal government, but that's really the only aspect that would be affected. Every other element of the plan could continue as planned.

Monica Trauzzi: And there have been discussions about creating partnerships between the neighboring states, like the Western Climate Initiative, the Regional Greenhouse Gas Initiative. How might that help sort of the preemption of what you guys are already trying to do once a federal policy comes into place?

Chris Busch: Well, I think, all the work that has gone into thinking about the best form of cap-and-trade programs and linkages and getting all the state-level policymakers thinking about these climate solutions and how to implement them will move the effort forward in the same way that the federal government can't do everything. State and local governments and the citizenry are going to also have to - everyone has a role, so I think these regional efforts, you know, in addition to building support for a federal policy will, in the long run, continue to pay off with action at the regional or state level.

Monica Trauzzi: California has also been aggressive about setting up a renewable portfolio standard. What are the implications for the Western energy markets when it comes to an RPS?

Chris Busch: Well, I think, we're going to continue the trend we're seeing with more and more clean energy development going in the ground. I think we're going to see increased -- less vulnerability to fossil fuel price spikes. I think we're going to see cleaner air. We're going to see more domestic sources of energy.

Monica Trauzzi: Final question here. What can we expect from the CARB in the short term, long term, what's coming?

Chris Busch: My understanding is that shortly we will see a sort of draft cap-and-trade outline, in the same way that the Energy and Commerce Committee on the House side and the Environment and Public Works Committee on the Senate side released sort of initial discussion drafts and then filled in the allocation issues later. I think we'll see that in the California plan. There will be a number of areas where there will not be details filled in. There is an economic and allocation advisory committee that was created in part to advise on these modeling issues, as well as to have advise on allocation questions. That body is going to be putting out a report at the end of the year. And then the Air Resources Board is scheduled to adopt a cap-and-trade rule by November of next year. All the elements of the global warming plan would need to be adopted by the end of next year and so there are a number of other parallel regulatory proceedings that are ongoing to fill in all the elements of the plan.

Monica Trauzzi: OK, we'll it right there. Thank you for coming on the show.

Chris Busch: Thank you.

Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.

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