See, We’ll Use California as a Model

By February 25, 2009Economy, Energy, Global Warming

From The New York Times, “Economic Crisis Complicates California’s Goals on Climate“:

COLTON, Calif. — Only a few years ago, CalPortland planned on keeping its plant here operating as long as Mount Slover’s limestone held out. For more than a century, Colton’s kilns and crushing machines have been churning out cement for the streets and buildings of Los Angeles.

But the company says the plant’s future is now uncertain. The recession has sent cement prices plunging, lowered profits and forced CalPortland’s drivers to cut back on hours. And the company says it faces new expenses: the cost of meeting California’s new requirements that manufacturers take steps to curb emissions of carbon dioxide, the main heat-trapping gas linked to global warming.

The state’s plan includes a cap-and-trade system, a concept that President Obama endorsed in his speech last night. It turns out that in trying to sell the scheme to transform the state’s economy, economist/advocates/analysts dramatically underestimated the costs.

But the projections were strongly criticized as unrealistic by the affected industries and by independent economists who reviewed the analysis — including two from the Pew Center on Global Climate Change, which supports the emission reduction goals.

In one withering review, Matthew E. Kahn of the University of California, Los Angeles said the analysis unconvincingly portrayed the law as “a riskless free lunch.” Another economist, Robert N. Stavins of Harvard, said the regulators were “systematically biased” in ways “that lead to potentially severe underestimates of costs.”

The comments are found in the peer review comments to the California Air Resource Board’s Economic Analysis Supplement to the Climate Change Draft Scoping Plan.

So much for policy being driven by sound science. It’s certainly not a good precedent for a national cap-and-trade scheme.

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