At least AB 32, our climate change bill passed in 2006, recognized that California alone can’t fix climate change and that higher costs only in California will hurt jobs, the economy and even the environment. So AB 32 included important features to keep regulations affordable and meet a 2020 goal. Now there is a push to throw those protections out the window and give unelected regulators free-reign to impose whatever costs may be required to meet a stringent new goal for 2030.
AB 32, still in effect until 2020, requires regulations to be cost-effective, technologically feasible, and limit emission “leakage” to other regions. Leakage happens when manufacturers and other energy users avoid paying high-costs by relocating or expanding to other states or countries. That’s a big environmental problem because out-of-state electricity is often based on burning coal and global emissions will increase if manufacturing grows there. Our clean electricity system allows California manufacturers to support both jobs and the environment.
Jobs and the environment will suffer if SB 32 and AB 197 pass this year. It is misleading to call these bills an “extension” of AB 32 to set a new goal for 2030. New authority granted to ARB allows them to increase costs far above the standards set in AB 32. There is no adequate oversight and control to minimize costs, prevent regulatory overreach and limit emissions leakage.
Energy costs matter in California. State manufacturers already pay electricity rates 70 percent higher than the national average. Special-interest groups point to relatively low residential energy bills (due mostly to our mild climate) to minimize the impact of higher rates. But that doesn’t apply to manufacturers who use electricity to make products, not just for lighting or air-conditioning. Other energy costs such as for transportation fuels are higher by 15 cents a gallon directly as a result of AB 32 regulations. The largest manufacturers must also comply with site-specific regulations that add hundreds of millions of dollars more each year to their cost of doing business.
It is widely acknowledged that California manufacturers are the most energy-efficient in the nation. We should all want to see manufacturing growth in California. But alarming data shows we had the lowest levels of new manufacturing sites or expansions in the nation considering our size (see chart here). Manufacturing job growth in California since the recession ended in 2010 has been a paltry 3.8 percent compared to a healthy 7.4 percent average for other states. California is also down 180,000 manufacturing jobs since pre-recession levels and so-called “green” jobs, even with the loosest definition, remain at barely two percent of our overall job base.
California can play a leadership role to address climate change. A good place to start would be to acknowledge the global emissions that have grown in other regions as a result of our poor efforts to retain and grow manufacturing here. A credible climate plan should include strong protections to send a signal that energy costs will be affordable for the long term to encourage new manufacturing investments and jobs. Such a plan would show the world that reducing greenhouse emissions can be done while maintaining a productive economy. SB 32 and AB 197 simply punishes California manufacturers and is not the right climate change plan for California.