To All Interested Parties:  Today, the Western Climate Initiative (WCI)’s Cap Setting and Allowance Distribution (CSAD) Committee released the Draft Statement of Principles on Competitiveness and the Review of Proposed Options for Addressing Industrial Competitiveness Impacts.

Under a cap-and-trade program, the cost ofswitching to cleaner energy and lowering emissions may disproportionately affect competition for sectors that are emissions-intensive and operate in global markets.  In contrast, the costs of inaction on climate change in the long term are high and potentially catastrophic.  The CSAD Committee, among other things, is responsible for developing the WCI approach to address competitiveness issues.  The purpose of CSAD’s work in this area is twofold:

• To seek, receive, review and perform analyses from sectors or sources identified (by WCI or through self-identification) as facinga cost within the WCI that their competitors outside the WCI do not. Those sectors or sources may be vulnerable to competitiveness pressures because ofthe short term regulatory imbalance and could lead to increased emissions outside the WCI, which we seek that may be in our interest to minimize.
• To assess options that WCI Partner jurisdictions may use to address competitiveness issues within identified sectors.  If a common allowance distribution method is recommended, the CSAD Committee will recommend a distribution method or methods for consideration by the WCI Partner jurisdictions. 

The purpose of the draft statement of principles is to guide the process by which WCI will evaluate competitiveness effects of a regional cap-and-trade program.  The principles shall serve as the foundation for a common approach to addressing competitiveness issues agreed upon by the WCI Partner jurisdictions.

In addition, the CSAD Committee reviewed how other programs currently address or propose to address competitiveness issues.  These policy options are evaluated in a three page summary and table entitled Review of Proposed Options for Addressing Industrial Competitiveness Impacts. Legislative proposals, reports, and programs on competitiveness which the Committee analyzed include:

• Inslee-Doyle Carbon Leakage Prevention Act (H.R.7146)
• American Clean Energy and Security Act of 2009 (H.R. 2454)
• Australia’s Carbon Pollution Reduction Scheme
• Lieberman-Warner Climate Security Act of 2008 (S.3036)
• California’s AB 32 Global Warming Solutions Act
• The European Union cap-and-trade program – EU ETS Phase III
• RGGI Northeastern cap-and-trade program on the electricity sector
• Two reports published by the Pew Center on Global Climate Change
  

These programs and proposals provide key background information for Committee’s work on competitiveness.  The Draft Statement of Principles on Competitiveness will be available on the WCI website for review and public comment for four weeks.  Public comment on the Draft Statement of Principle on Competitiveness should be submitted via the WCI website by August 28.