It has been eight years since the enactment of Assembly Bill 32, the California Global Warming Solutions Act of 2006. AB 32, which mandated a statewide reduction in greenhouse gas emissions (GHGs) to 1990 levels by 2020, which heralded California as the game-changer in international climate change. Since then, regulators have worked hard to design and enact an extensive collection of programs, mandates and strategies to meet the requirements of the new law which layer on top of all the other environmental regulations already in place.
When AB 32 was first put into place, the Governor and Legislature were well aware that if California were to go it alone, it would cover less than the 1% of global emissions generated. It was intentionally designed as a model program with the working realization that if it was to be successful, other states and nations would have to join California’s lead. To date, there has been limited action from other nations and states, due to an unwillingness to confront the actual climate change threat or the potential impact on their economies through increased electricity and fuel costs.
Nonetheless, there are now clear signals that a new round of policies to expand California’s existing AB 32 climate programs into 2030 and 2050 will be a major focus in the 2015 legislative session. While business leaders have worked hard to comply with the AB 32 regulations to reduce greenhouse gases, they also believe it is critical that policymakers understand the unintended consequences of the current policies through a comprehensive cost-benefit analysis of these programs as they impact California families and businesses still struggling through our state’s uneven economic recovery.
For example, since 2012 our current climate change mandates have doubled the rate increases for electricity costs on businesses and consumers and will soon raise fuel prices 10 cents to 50 cents a gallon. These rising energy costs create an additional burden that limits job creation and economic growth. Economist Michael Shires, PhD, examined the impacts of California’s energy policies and noted: “The sectors most likely to be adversely impacted are the very sectors and places in the economy where the region’s poor and less-educated workers have the best opportunity to work their way into the middle class.” New energy programs cannot suppress the “opportunity ladder” to help families rise up to the middle class.
Before expanding on AB 32, policymakers must also ensure that policy goals align not just with desired outcomes, but with actual outcomes. For example, we often hear that “green jobs” will fill the void created by job losses from the current climate policies. So far, the data irrefutably shows that green jobs are few in number and also come with large public subsidies. That’s not a sustainable pathway to a competitive economic future with a broad base of middle-class jobs.
Climate change threatens all of us but the residents and businesses of California can be even better served if the Governor and the Legislature consider key guiding principles in the development of new or expanded energy and climate policies:
- Affordable Energy: New programs must be affordable, ensure economic competitiveness for jobs and avoid disproportionate impacts on disadvantaged communities.
- Achievable Goals: California’s energy and climate laws must be technologically feasible, fact-based, scientific, and transparent in the purpose and execution of the program.
- Accountability for Regulators: New programs must be crafted through a transparent legislative process, and they must include benchmarks for measuring success during implementation and determining if modifications are needed.
- Alignment with Other Jurisdictions: Emission reductions in California alone are not enough to make a real impact on climate change. New mandates should avoid putting the state at a competitive disadvantage and make stringent requirements contingent on similar action from outside the state.
- Accommodation to Meet Changing Economic, Environmental and Infrastructure Challenges: It is impossible to anticipate all of the changing dynamics in technology, climate modeling, economic conditions, or national or worldwide climate action. For that reason, post-2020 climate change policies must be crafted in a way that allows flexibility to meet changing conditions in the future.
California took bold actions to lead the world in climate change policy in 2006. Now, we must ensure that we not only do it first, but do it right. Fully addressing costs and economic factors is not only critical for our jobs future, but for the success of climate change efforts. If California’s efforts result in limits to job growth and increasing costs of living in our state, the likelihood of other jurisdictions joining in the effort becomes far less likely. Designing the program now to truly balance economic and environmental goals will ensure that California truly leads with a model policy that other states and nations will follow.