Benefits of California GHG reductions would outweigh costs: study

Washington (Platts)--19Jan2006

The majority of the greenhouse gas reductions sought by California Gov
Arnold Schwarzenegger can be largely met at no net cost to California
consumers and can eventually save them money, according to a study by a
Washington-based think tank. 

     The Center for Clear Air Policy released the study, funded mostly by
foundations, Thursday. The California Energy Commission provided about 20% of
the roughly $300,000 spent on the study.

     Annual GHG emissions in the state are about 493-mil metric tons,
according to a June 2005 CEC inventory. Schwarzenegger has pledged to enact
policies aimed at cutting 58-mil metric tons of carbon dioxide equivalent by
2010 and 145-mil metric tons by 2020.

     The CCAP study does not include the potential cost of cutting emissions
through a cap-and-trade program for power plants. Market studies are unlikely
until Schwarzenegger decides whether to create a trading program. An advisory
panel appointed by the governor is expected to deliver a report outlining
trading as one way to meet the state target on Feb 15.

     CCAP President Ned Helme told reporters in a conference call that the
state should have a robust carbon market "in the next several years." Under a
trading program, California could potentially link to similar markets in
Europe or the northeastern US, he added.

     The state can cut 51-mil metric tons by 2010 through existing standards
to limit GHGs from cars and trucks and increase the efficiency of appliances,
the study said.

     The price of cars and appliances could increase, but the $5.25/metric
tons of CO2e reduction in 2010--for a statewide total of $154-mil--would be
dwarfed by electricity and gasoline savings of $762-mil.

     The state can meet 125-mil metric tons of the 2020 target if they enact a
wide range of measures across industry sectors, CCAP says. Those steps include
shipping goods on railroads instead of large trucks, which emit more GHGs; use
of no-till farming techniques; capturing methane, which has 21 times the
climate change potency of CO2, from landfills; using manure from dairies
(California has the most in the US) to generate electricity; and eliminating
fluorocarbons from the semiconductor manufacturing process.

                 ---Martin Coyne, martin_coyne@platts.com

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