Three years ago, California legislators did something politicians are seldom brave enough to do: they recognized their limitations and gave away some of their power.

In passing landmark green chemistry laws, lawmakers admitted that they were no match for scientists when it came to sorting through the data, analyzing alternatives and making a rational chemicals management policy. Under the new laws, that would be left to scientists and regulators at the Department of Toxic Substances Control.

It was a truly courageous move. If only they’d meant it.

As the DTSC nears the end of three years of public hearings, written comments, sub-committee meetings and reports, and is about to release proposed green chemistry regulations, the Legislature appears poised to step back into the business of making chemical policy on their own.

California has lost a third of its manufacturing sector and the California Air Resources Board (CARB) continues to try to implement the state’s AB 32 carbon reduction program in a cost-effective manner.  The rest of the country has lost a large portion of its manufacturing as well, but at least temporarily given up on mandatory carbon reductions.
 
Cap-and trade is the policy with which CARB intends to produce about 20 percent of the state’s carbon reductions but it is targeted at about 600 facilities during the first three years.  Under the program cap, a facility will either have to pay for more expensive equipment to produce less carbon, pay for an offset, or purchase credits in a market.
 
California industry is famously efficient due to decades of higher than average energy costs, including 50 percent higher electricity rates than the rest of the country.

Friday Lt. Gov. Gavin Newsom released a California economic development and job growth plan as his first major policy move since he was elected.

Congratulations are in order for Newsom and his report. He is showing he is serious about growing our job base by making the state attractive to manufacturing and other high wage sectors.

California’s economy needs large scale job creation in every sector.  Our state must catch up and once again outpace the country’s economic growth. This will require aggressive action not seen in California for over a decade. It will also depend on developing the state’s existing job base and employers as a means to California’s expansion. In the past, Newsom has said many times, that "95 percent of growth is organic," meaning it’s easier to grow an existing California company than start a new one.  We could not agree more.

For the past few years, economic development in California has comprised of picking and providing for one winning sector, but consequentially leaving many other losers, often times existing industries, such as manufacturing and other sectors. Every job should count in California.

During a recent California Energy Commission proceeding on our clean energy goals, it was recommended that job creation be included as a metric for measuring the success of clean energy policies. This will only be meaningful if we count all the jobs that will be lost as a result of a policy. Therefore our job creation goal, and the metric to measure it, should only count net new jobs.

This prompted us to look at the Brookings Institution’s recently released report on green jobs — Sizing the Clean Economy. The report stated that California leads the country in the "green" sector, boasting 332,000 jobs.  To put things in perspective, that number accounts for only two percent of the state’s entire job base and about one job for every 115 people. Further it doesn’t make up for the state’s overall jobs loss, nor does it make up for the state’s high wage job losses.

Green job definitions vary widely, depending on who you talk to.  For instance, the Brookings report maintained that public mass transit operators are in fact "green".  Regardless, even with the broadest definitions, the green economy on its own will not catapult California into its next greatest economic boom.  The emerging sector is just another important part of the overall economy that will only grow if it — just like our coveted high wage sectors — can compete and invest here in California.

Last week the well-regarded Daniel Weintraub wrote an accurate but complacency-inducing everything-will-be-ok Orange County Register article based on 2010 job data. 

He emphasized that California’s job growth, sans the construction and government industries, trended with the rest of the country.  Weintraub looked backward, saw some non-momentous trends either way and concluded that the job "numbers bode well for the state’s economic future."

California’s problems are so big, we can’t afford to wait and hope for a large recovery to come our way.

Why does a man in Compton, with an oil rig in his backyard and a refinery down the street, pay more for oil than a man in Honolulu?

A large part of that answer is California regulations that come without economic impact analysis.

Democrat State Senator Rod Wright recently posed that question and testified at the State Water Resources Control Board regarding their attempts to finalize very costly California-only stormwater permitting regulations.

“California is continually leading with our chin,” said Sen. Wright. “I would suggest that we look at these standards and see where everyone else is going. I would like to see us take this regulation and slow down.  Let’s look at what Arizona, Nevada, and Oregon are doing.  We can’t [compete] if our regulations are so stringent.”

Yesterday the Inland Daily Bulletin wrote about a California-based hydrogen-powered fuel cell company, Bing Energy, deciding to locate its manufacturing, along with a headquarters and a technology lab, in Tallahassee, Florida.

Bing officials indicated clearly that it was 15 percent cheaper to operate in Florida and that the Sunshine state unequivocally wanted them there.

In the same article, Chris Thornberg of Beacon economics countered, "we’ve lost a lot of manufacturing jobs, but a lot less than in other states.  California (manufacturing) is weathering the storm better than the nation overall."

The Public Policy Institute of California similarly countered that, "only a small fraction of the state’s job losses are due to businesses leaving the state."

Last week we heard about California’s budget crisis in Gov. Jerry Brown’s 20-minute State of the State address.

While Gov Brown stuck to state budget details in a brief 20-minute address, the regulatory crisis movement is gaining momentum as a realistic solution to revenue shortfalls here and across the country.

For example:

• President Barack Obama and Senator Darrell Steinberg take steps on reform
• see Florida
• see Maryland

California’s bill signing deadline passed last week and the outcomes of
a few specific bills send conflicting signals to manufacturers and
private sector job creators about the state’s interest in their ability
to compete and grow jobs.

Here’s a look at the result of four of the most important bills
affecting the state’s manufacturing job base and competitiveness:

Bad signal #1

If you
haven’t heard of California’s ‘Green Chemistry Initiative, you  will
soon.  It is a bold step that has the potential to change the way  we
approach chemicals in consumer products.

It also has the potential  to
further hamstring California’s struggling economy, drive jobs from  the
state and raise consumer prices.  So, it’s an issue worth our
attention.

In  a nutshell, the ‘Green Chemistry Initiative’ is a California-only
endeavor to identify and regulate "chemicals of concern" in consumer
products made or sold in California.  It would regulate alongside
existing oversight by the FDA, EPA, Prop. 65 and many others. The
Department of Toxic Substance Control is now finalizing the
regulations  to make this plan a reality.

These rules will determine whether the initiative enhances consumer
safety, inspires innovation and triggers new investment, or whether it
delivers only increased costs, lost jobs and crippling new burdens on
manufacturers and business in California.