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Arizona’s voice needed in Western Climate Initiative



This year, the member states and provinces of the Western Climate Initiative will be working on details for a cap-and-trade system for regional greenhouse gases.

The plan calls for a regional cap-and-trade program to be implemented starting in 2012.

The Arizona Investment Council believes it is unwise for the Western states to proceed with carbon controls in advance of a national program.

Nevertheless, we also believe Arizona should continue to have a strong voice within the initiative to protect Arizona interests as program details continue to be developed.

Former Gov. Janet Napolitano brought Arizona into the WCI as a founding partner in February 2007.

This exercise of executive authority understandably rankled many legislators, who believe the decision to join WCI had to be made in concert with the 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, Gov. Jan Brewer has signaled her intent for Arizona to remain a participant in WCI under her leadership and new administration.

The Arizona Investment Council, like many stakeholder organizations, is concerned that a regional cap-and-trade system will impose new costs on energy production that will further drag down Arizona’s economy and place it at a competitive disadvantage.

The Western Business Roundtable recently issued a report detailing the economic costs of such a program in the WCI region.

That report concluded that adoption of cap and trade only in the West would do little to improve global warming, but it would substantially raise energy prices and deepen the recession, which many economists predict will extend well into next year.

While a regional cap and trade may improve the competitive position of renewable energy sources relative to fossil fuels, Arizona consumers will feel the sting of higher costs and reduced disposable incomes.

Nevertheless, it appears inevitable that environmental externalities such as greenhouse gases will be built into the cost of energy.

Our council believes it should be done carefully at a national level with an even playing field for all producers and consumers.

To the extent that the governors in WCI seek to influence a federal program or to implement controls that exceed a federal standard, Arizona should remain at the regional table to ensure that the potential economic consequences of carbon control measures are considered and to explore all avenues for reducing greenhouse-gas emissions, including investment in renewable generation, energy efficiency, clean coal technologies and nuclear generation.

Gary Yaquinto is president of the Arizona Investment Council.

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