Politicians dispute the immediate economic impact of Assembly Bill 32
Is California’s landmark law to ratchet down greenhouse-gas emissions good for the state’s economy? It depends who gets asked.
Backers of Assembly Bill 32, the 2006 law that requires California to reduce emissions of gases such as carbon dioxide to 1990 levels by the end of the decade, argue that efforts to improve fuel and energy efficiency will spark more innovation, kick-start new green industries and generate thousands of white- and blue-collar jobs.
“We can achieve the goals of A.B. 32 without adversely affecting the growth of California’s economy over the next decade, especially as the state recovers from the current economic downturn,” the California Air Resources Board concluded in its March 24 updated economic analysis of the pioneering global-warming law.
Critics of A.B. 32, which include oil companies and manufacturers, counter that imposition of even stricter pollution controls will increase energy costs, drive businesses from the state and cost California jobs—especially in the industries most impacted by air-quality issues.
“We view [the air board’s] conclusion very skeptically given the fact [its] own economic advisers have found that AB 32 would increase the cost of electricity, natural gas and gasoline,” reads a statement from the AB 32 Implementation Group, a coalition of businesses critical of the law, upon the release of the updated economic analysis.
Gov. Arnold Schwarzenegger, an ardent defender of the law he signed four years ago, points to various studies that say greater energy efficiency and ratcheting down greenhouse-gas emissions lead to creation of jobs in new, cleaner industries.
The GOP governor cites an October 2008 study by Next 10 (www.next10.org), which concludes that from 1972 to 2006, “Energy efficiency measures have enabled California households to redirect their expenditure toward other goods and services, creating about 1.5 million [full-time equivalent] jobs with a total payroll of over $45 billion, driven by well-documented household energy savings of $56 billion. … A lower carbon future for California is a more prosperous and sustainable future.”
More measured is a June 2009 study by The Pew Charitable Trusts, which notes that America’s “clean energy economy” is “very much in its infancy.” And, the study says, California is no longer trying to balance economic growth and sustainability.
Forty-six states offer tax incentives to encourage use of renewable energy or greater energy efficiency. Residential, commercial and industrial loans to subsidize improving energy efficiency or switching to renewable energy are offered by 33 states. The District of Columbia and 22 other states offer rebate programs to promote the installation of solar water-heating systems or solar panels. California is one of 29 states, which, along with the District of Columbia, require a minimum amount of power to come from renewable sources.
But, Pew concludes, it’s too early to tell whether these efforts will succeed in stimulating U.S. job growth, strengthening America’s competitiveness, curbing pollution and conserving resources.
In its updated analysis, the air board says in 2020, A.B. 32 will add 10,000 jobs to the state’s workforce—down from the 120,000 jobs it initially claimed would be created. Even 120,000 jobs is less than 1 percent of the state’s current 16 million-person workforce, which the board predicts will grow to more than 18 million 10 years from now.
The Legislative Analyst’s Office, which has been critical of some of the air board’s economic assumptions, offers this assessment in a March 4 letter requested by Sen. Dave Cogdill, a Modesto Republican:
“It seems most likely to us that the implementation of AB 32 will result in the near term in California job losses,” defining near term as the next five years. “In the longer term, the employment effects, in our view, are unknown and will depend on a number of yet-to-be determined factors. These include future energy prices, technological developments in the energy area, normal adoption by households and businesses of increasingly efficient energy technologies even without AB 32 in place, legislative actions … and the state of California’s economy.”