Monday, November 23, 2009

Cap-and-trade demands international solution

Any cap-and-trade policy must keep Minnesota businesses on a level playing field with their competitors in the national and global marketplaces. That’s why the Minnesota Chamber advocates a national program – but only if it is crafted within the context of an international agreement. That critical element is missing from the current debate in Congress. The proposed legislation is certain to result in higher energy prices that will be passed to ratepayers. Minnesota’s mining and forest products industries will particularly be hit hard. Overall, any product manufacturer with global sales will be less competitive if energy prices increase significantly.

This negative impact will be made worse by the proposed allocation of emission allowances for electric utilities, which penalizes utilities that are more coal dependent. Customers in Minnesota and the Midwest rely heavily on coal-powered electricity generation. As a result, they will be affected disproportionately compared with other regions, creating another competitive disadvantage for businesses.

The business community has a strong record of advancing initiatives that benefit the environment and the economy. But the federal legislation as currently framed – especially without an accompanying international agreement – won’t solve the problem, be efficient or cost effective.

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