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Arizona's Voice Needed in Western Climate Initiative
Arizona's Voice Needed in Western Climate Initiative

This year, the member states and provinces of the Western Climate Initiative (“WCI”) will be working on the details for a regional greenhouse gases (“GHG”) cap and trade system.  The plan calls for implementation of a GHG cap and trade program to begin in 2012.  While AIC believes it unwise for the western states to proceed with carbon controls in advance of a national program, we, nevertheless, believe Arizona should continue to have a strong voice within WCI to protect Arizona interests.

Former Governor Napolitano brought Arizona into the WCI as a founding partner in February 2007.  This exercise of executive authority understandably rankled many state legislators who believe the decision to join WCI must be made in concert with the state legislature.  Consequently, HB 2467 was introduced to prohibit participation in WCI by Arizona’s Department of Environmental Quality (the agency currently leading Arizona’s participation).  HB 2467 recently passed out of the House Environment Committee by a single vote majority with only five members voting.

Interestingly, Governor Brewer has recently signaled her intent for Arizona to remain a participant in WCI under her leadership and new administration. 

AIC, like many other stakeholder organizations, is concerned that a regional cap and trade system will impose new costs on energy production that will create a further drag on Arizona’s economy and place it at a competitive disadvantage.  The Western Business Roundtable recently issued a report detailing the economic costs of cap and trade.  The Roundtable Report concluded that adoption of cap and trade would do little to improve global warming, but would substantially raise energy prices and deepen the current economic recession, which many economists predict will extend well into next year and possibly into 2011.  While cap and trade will improve the competitive position of renewable energy sources relative to fossil fuels, Arizona consumers will feel the sting of higher costs and reduced household incomes.

Nevertheless, if environmental externalities such as GHGs are to be built into the cost of energy, as policymakers seem inclined to do, it should be done carefully at a national level with an even playing field for all producers and consumers.  Our policymakers must be mindful of the potential economic consequences of carbon control measures and explore all other avenues for reducing GHG emissions including investment in sequestration and clean coal technologies.  Arizona should remain at the regional table to make sure those and other important points on this issue are made.

Gary Yaquinto, AIC President