Cap and Trade Rules
Cap and Trade Carbon Program Could Prolong Recession

Business Roundtable
February 18, 2009

New group turns up the heat on cap-and-trade debate

A proposed multistate "cap and trade" program to reduce industrial carbon
emissions in the West could make the recession last longer and chase away
high-tech investment to other states, a report commissioned by the Western
Business Roundtable says.

Environmentalists said the report is faulty.

The report, released Wednesday by the Lakewood, Colo.-based
business-policy and lobbying group, examines the Western Climate
Initiative, a program launched in 2007 by the governors of seven western
states and the premieres of four Canadian provinces to find ways to limit
emissions of "greenhouse gases."

The initiative, which has been championed by California Gov. Arnold
Schwarzenegger, is underway in California.

The initiative has proposed setting industrial pollution limits, or
"caps," and letting businesses that meet the caps sell pollution
allowances to companies that don't meet the limits.

The initiative's goal is to reduce greenhouse-gas emissions in the West by
15 percent below 2005 levels by 2021.

The Business Roundtable said the program "could prolong the economic
recession, weaken already overburdened Western power grids and will
deliver a temperature 'benefit' of only one ten-thousandth of a degree
Celsius even after a century of operation."

It said the 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."

"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," Jim Sims,
president and CEO of the Business Roundtable, said in a statement

In response, the Natural Resources Defense Council, an environmental
group, said the Business Roundtable report "ignores the West's potential
to drive job growth and economic opportunity with renewable energy and
energy efficiency."

Authors of the roundtable report "misunderstood the design of the program.
... Using flawed assumptions, they have drawn erroneous conclusions,
particularly about the benefits of renewable energy and energy
efficiency," Michael Gibbs, assistant secretary of the California
Environmental Protection Agency, told the Los Angeles Times .


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