Business group blasts Western Climate Initiative

A carbon-trading plan promoted by several Western governors could prolong the economic recession and weaken overburdened power grids, according to a report commissioned by WBR.

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Feb. 18 -- A carbon-trading plan promoted by several Western governors could prolong the economic recession and weaken already overburdened power grids, according to a report commissioned by the Western Business Roundtable (WBR).

The Western Climate Initiative (WCI) was outlined last year by seven US governors and four Canadian provincial premiers.

WCI seeks to cut regional greenhouse gas (GHG) emissions in coming years. Its members are Arizona, California, Montana, New Mexico, Oregon, Utah, Washington, British Columbia, Manitoba, Ontario, and Quebec.

The WBR, a Colorado-based business group, told reporters on Feb. 18 that the WCI would be ineffective and would discourage investment. A study commissioned by the roundtable concluded that WCI could "chase away tens of billions of dollars in high technology investment from the West to other regions."

Jim Sims, WBR president and chief executive officer, said analysis indicates the initiative would impose new costs on consumers, retard job creation, and offer no scientifically measurable benefit in terms of reduced global climate temperatures through 2100.

WCI's plan is based on an economic model that precludes installation of new electric power capacity in the region except for highly intermittent wind and solar power generation, Sims said, adding he doubts Western politicians fully realize WCI's sole emphasis on renewable energy and its lack of support for fossil fuels.

"Between now and 2020, we are going to need more power plants of all kinds," Sims said, adding that he hopes conclusions of the roundtable's study will "help awaken political leaders in the West that WCI is not the way to go."

WCI disagrees
The study was incorrect in its conclusion that WCI does not want to use the diverse sources of energy supply in the West, said Janice Adair, WCI US cochair from Washington state.

"Our economic analysis assumed only the new energy sources that were currently on the books for development," Adair said. "We felt it would be imprudent to include new coal plants with CCS (carbon capture and storage) technology or new nuclear facilities to be on line by 2020 given the need for further research and development, or the time to permit."

She also suggested that the study's author did not understand the Renewable Portfolio Standards that have been adopted by all the WCI states.

"The level of renewable energy generation reflected in the WCI modeling is a reflection of these standards," Adair said. "It is not that we intend to rely solely on renewable energy and thus weaken the grid."

Study conclusions about WCI
Roger H. Bezdek, president of Management Information Services Inc., analyzed WCI for WBR. He said WCI largely would preclude building gas, hydropower, coal, and nuclear power plants in states signing the initiative.

States and provinces must enact legislation to participate in WCI. California adopted a state climate plan in December 2008 and is leading the way among WCI advocates in legislative efforts to formally adopt WCI's regional plan.

WBR includes executives of all types of businesses operating in the West, Sims said. The roundtable has widespread opinions on what Congress should do regarding GHGs, he said.

Bezdek concluded it is not feasible to implement WCI. His analysis also warned that the WCI plan could result in the following consequences, including:

-- Increase energy costs that could disproportionately harm low-income and minority families, particularly minority families, who are among the most vulnerable to price shocks.

-- Require the establishment of a large and powerful new government bureaucracy to set and monitor emissions caps.

"WCI should not be implemented by any state in the US, given the grave economic problems that the US and the West currently face," Bezdek said.

Adair disputed Bezdek's finding that the WCI design was insensitive to low-income communities.
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