Point Carbon: New Mexico ETS to Boost Economy: Study

February 2011

New Mexico’s plan to cut its GHG emissions will add $2 billion to its economy, a new report found.
Critics have claimed that the southwestern state’s plan to cut its GHG emissions 3 per cent per year from 2010 levels would harm its businesses, but an economic analysis by Synapse Energy Economics found just the opposite to be true.

 

The report said the effort will create more than 17,500 jobs through 2020, which will deliver more than $1 billion in household income.

“It will add more than $2 billion in total added economic value to New Mexico’s families, businesses and communities,” the report said.

The programme, which is scheduled to start in 2013, would raise electricity rates by less that 1 per cent and have only a minor impact on the cost of oil and gas production, increases that would be more than offset by the economic benefits, the report said.

The study said the price increases are “trivial” when compared to rate hikes implemented by the state’s largest utility, PNM, over the past two years.

PNM is currently pushing a 12.5 per cent electricity rate hike, which would drive PNM’s rate hikes to over 40 per cent over the past two years, the study said.

The programme would allow emitters in the state to trade and bank excess emission allowances as well as purchase carbon offsets to meet their annual target.

The programme sets an initial allowance price cap of $50 a tonne.

Still, it’s unclear whether any GHG reduction plan will ever get off the ground in New Mexico.

The programme only kicks in if the state doesn’t participate in the Western Climate Initiative (WCI), a regional cap-and-trade programme beginning in 2012 that would reduce emissions about 2 per cent per year.

New Mexico’s participation in the WCI in 2012 is considered unlikely because its new governor, Republican Susana Martinez, has said she is opposed to it.

She is also opposed to the 3 per cent per year reduction programme Synapse studied, which was approved by a state environmental board in November.

Last month, she dismissed all members of the board’s members and is currently trying to repopulate the board with people who deny the existence of man made climate change.

State environmental groups, led by New Energy Economy, have so far been successful in legal challenges against the governor’s efforts to trip up the implementation of the programme.

By Rory Carroll – rc@pointcarbon.com

Washington DC
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