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Cost Effective Strategies for Climate Change Policy for California,
the U.S. and the World
American Council for Capital Formation
By Margo Thorning, Ph.D., Senior Vice President and Chief Economist
April 11, 2006
Presented at Governor Arnold Schwarzenegger’s
Climate Change Initiative Summit
in San Francisco on April 11, 2006.
(PDF)
Introduction
Policymakers in California are considering ways to implement the Climate
Action Team’s Report (CAT) to meet the targets set by Governor Arnold
Schwarzenegger. The CAT’s targets for California are to reduce greenhouse
gas emissions to 2000 levels by 2010, 1990 levels by 2020, and to 80 percent
below 1990 by 2050. In addition, 20 percent of electricity used in California
is to be generated from renewable sources.
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Governor Schwarzenegger, right, opens the California
Climate Change Initiative Summit. Members of Panel 1, Regulation
in a Market-Based Economy: How Do We Meet the Governor’s Targets,
are, left to right: Dr. Thorning; Karen Douglas, Environmental Defense;
Thomas R. Tietz, California Nevada Cement Promotion Council; Professor
Lawrence H. Goulder, Stanford University; and Mike Peevey, California
Public Utilities.
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The CAT report (March 2006) states that reducing energy use and achieving
these targets will increase California’s employment by 83,000 jobs
and net income by $4 billion in 2020. As the CAT report admits, the cost-effectiveness
of many of their recommendations for reducing energy use have not been
evaluated so it is premature to assume that their recommendations on curbing
energy use will have a positive impact on California’s economy. In
fact, a substantial body of research by academics and energy modeling
firms shows that the costs of reducing emissions in terms of jobs and
economic growth can be quite large.
As California proceeds with its climate policy programs, it may be useful
to look at analyses of the impact of emission on reduction targets for
the U.S., the European Union and the world, as well as examining global
strategies that can reduce GHGs in a cost-effective manner.
Click
here for the full testimony (PDF).
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