Comment Log Display

Upon review of the final Climate Change Scoping Plan put forth by
the California Air Resources Board (CARB), we remain concerned that
it does not adequately assess the impacts to small businesses. With
a 7.7 percent unemployment rate and all-around tough economic
times, we are worried that California’s small businesses will be
saddled with billions of dollars in required upfront investments
necessary to implement AB 32. Small businesses often operate on
very small profit margins and we do not have the luxury of waiting
several years to see a return on our investments.  The unique
challenges and circumstances of California’s small businesses need
to be examined and evaluated in greater depth before CARB moves
forward with the actions and guidelines in its proposed Scoping
Plan.

The proposed Scoping Plan increases taxes, energy costs, fuel
costs, vehicle costs and building costs, which will hurt small
businesses that play a vital role in California’s economy.  While
we are hopeful that the climate change initiative will create new
jobs and increase revenue, we are concerned about the significant
short-term impacts and the undetermined long-term costs indicated
in the plan.  Because the effects of the plan will not be uniform
across all sectors, detailed analysis and understanding of the
individualized costs and benefits to each sector or industry is
critical.

There is not a straight correlation between who will pay the costs
and who will receive the benefits under AB 32.  The recent comments
to CARB by Judson Jaffe and Jonathan Borck of the Analysis Group
noted that “While all businesses will experience increased energy
prices as a result of AB 32’s implementation, the forecasted
energy-efficiency improvements will be unevenly distributed and may
occur even without AB 32’s implementation.  As a result, some
businesses will inevitably experience a net increase in their
energy costs and a reduction in their competitiveness as a result
of AB 32.”  

Jaffe and Borck found that businesses must reduce their
electricity and natural gas use by no less than 10 percent and 7
percent respectively in order to just break even and compensate for
the increases in price that will come under AB 32.  For the many
businesses that can’t achieve the efficiency changes quickly, they
will be burdened with higher bills for gas and electricity that
will place additional strain on their already tight budgets. As
CARB acknowledges, small businesses “typically spend more on energy
as a percentage of revenue compared to larger enterprises” –
meaning the small business community will be disproportionately
hurt by these cost increases.  

Unfortunately, the significant costs associated with the Scoping
Plan have not drawn the appropriate level of attention from CARB
thus far.  We understand that CARB sees many benefits that will
come with AB 32 implementation, and we look forward to experiencing
many of those benefits as well.  However, by glossing over the
costs that will accompany the benefits, we are reducing the chances
that California actually creates a successful climate change model.
 

Only with straightforward acknowledgment of the costs will
California’s experts and decision-makers be able to face the
challenges head on and identify creative and workable solutions. 
California needs to create a climate change program that will be
implemented effectively and replicated elsewhere, not one that will
have to be abandoned when the state suffers too severely from cost
impacts. Therefore, we recommend that CARB fully understands the
cost impacts of the AB 32 implementation policies before approving
the plans and moving forward.  We believe that it is possible to
reduce our greenhouse gas emissions without putting an unnecessary
burden on small businesses and consumers. 

We recognize that the Scoping Plan lays out the direction and
steps of AB 32 implementation and is not itself the regulations
with which small businesses must comply.  As your agency begins the
rulemaking and regulation process we hope that you will place the
highest value on adopting the most cost effective measures to meet
the goals of AB 32. We appreciate the steps CARB has taken to
better educate small businesses about the Scoping Plan and
understand the views of these vital economic engines.  Also, we
look forward to participating in this process and hope that we can
work together to craft a plan that protects the environment while
also promoting economic growth.

Thank you for your attention to this very important issue.

Sincerely,

John Kabateck
National Federation of Independent Business - California

Mary Griffin
National Association of Women Business Owners – Sacramento Valley
Chapter

John Handley
California Independent Grocers Association

Matt Sutton
California Restaurant Association

Joel Fox
Small Business Action Committee

Larry Dick
Riddle Service Companies

Betty Jo Toccoli
California Small Business Association

Joel Ayala
California Hispanic Chamber of Commerce