California, already in deep financial straits, is adding to its woes with an ethically feel-good action that will have virtually no effect on reducing world-wide emissions.
Two new studies are predicting economic devastation in California as the myriad regulation and costs resulting from AB 32, The Global Warming Solutions Act of 2006, take effect in the next eight years. The hit to state residents will total $35 billion in 2020—exceeding California’s combined revenue from sales tax, corporation taxes, insurance taxes, estate taxes, liquor taxes, tobacco taxes, and vehicle fees, according to a study by Andrew Chang & Company. The average family will pay an extra $2,500 by 2020 due to increased energy prices, reports Dave Roberts. (1)
The total cumulative cost to consumers will be $136 billion by 2020, according to the report. California’s gross state product will be reduced by $153 billion, representing a 5.6 percent decrease. In addition, the state will have 262,000 fewer jobs in 2020 than if AB 32 had not been enacted. Total state and local tax revenues will be reduced by more than $7.4 billion annually in 2020. (2)
On the bright side, the state is expected to meet its goal of reducing greenhouse gas emissions to 1990 levels by 2020. However, one-quarter of those reductions will be due to the economic slowdown resulting from AB 32 and the decrease in transportation fuel consumption due to increased costs and decreased earnings, the report states. (2)
The state’s outlook is not much better in the other report, which was prepared by The Boston Consulting Group. (3) It’s key findings include:
Gas prices could increase by $2.70 per gallon in California, depending on the cost of carbon.
Due to refinery closures, California could lose 28,000 to 51,000 jobs, including many high-paying skilled manufacturing jobs, as well as indirect job losses due to multiplier effects.
California could lose up to $4.4 billion of tax revenue per year by 2020.
California’s climate-change regulation will discourage energy intensive industries form locating in the state, and existing industry will have an incentive to leave the state.
Never mind that California is already broke. California’s economy, once the world’s 5th largest, has slipped to 9th place. California’s real estate market tanked half a decade ago with the value of homes plummeting by 20% to 50%. The state’s unemployment rate sits at about 12%. However, some blue collar labor unions—particularly construction workers—report the jobless rate at an estimated 40%. Tom Tanton adds, “Some say the annual budget, about $100-110 billion is $16 billion in the red, while others estimate the deficit is really higher (in the low $20 billion). The state simply has a habit of bleeding red ink.” (4)
Chief Executive Magazine has just come out with a survey of 650 corporate CEOs on the business climate in their states. They ranked local conditions on a range of issues, including regulations, tax policies, work force quality, education resources, quality of living, and infrastructure. California was dead last in the attractiveness to business for the eighth year in a row, while Texas came in first for the eighth consecutive time. (5)
This economic version of Dante’s circles of hell has driven jobs from the state at an increasing pace. One relocation firm calculates that last year, a total of 254 California companies moved some of their work and jobs out of state—a number that is 26 percent higher than that of 2010 and five times higher than 2009. (6)
Chip Knappenberger asks this question: What is California achieving in terms of climate for its sacrifice? The answer? Even an immediate and compete cessation of all greenhouse gas emissions from California now and forever would result in no meaningful impact on the future course of climate change. (7)
Let’s compare the total emissions savings (under AB 32) to the annual growth in CO2 emissions from countries besides the United States. According to data from the Energy Information Administration, if AB 32’s entire goal of limiting California’s CO2 emissions to a level that is 80% below 1990 levels could be met tomorrow, instead of waiting until 2050, the entire emissions savings under this plan would be completely replaced by new emissions form the rest of the world in less than 6 months. (7)
Worldwide coal consumption has increased by almost 50% over the last ten years alone. Such a rash increase has never been seen before. China and India alone account for 90 percent of this increase. At 42.8%, almost half of the world’s coal consumption is by China . And if that isn’t high enough, plans by China’s leadership provide for a coal power expansion of 600 gigawatts by the year 2035. Also, in western countries, coal consumption increased by 5.2% in the year 2010, the most since 1979. (8)
For China alone, projections put this country’s emissions in 2030 in the range of 500% above 1990 levels. Globally, this translates to about 40% of all new energy-related CO2 emissions between now and 2030. If China’s emissions continue to grow at the rate of 10% per year, by the year 2040 it could be emitting as much CO2 as the entire world is today. (9)
All of this indicates that California is shooting itself in the foot because their policies will have no effect on climate while further exacerbating the state’s financial woes.
References
Dave Roberts, “Studies predict AB 32 will crash California economy,” foxandhoundsdaily.com, July 18, 2012
“The fiscal and economic impact of the California Global Warming Solutions Act (AB 32) pre-release briefing,” Andrew Chang & Company, June 2012
“Understanding the impact of AB 32,” The Boston Consulting Group, June 19, 2012
Tom Tanton, “California’s cap-and-trade, Making ourselves poorer and dirtier (Part 2),” masterresource.org, April 5, 2012
J. P. Donlon, “Another triumph for Texas: Best/worst states for business 2012,” chiefexecutive.net, May 2, 2012
John H. Fund, “California demon,” The American Spectator, July-August 2012
Chip Knappenberger, “California’s path to regulatory hari-kari: For what climate effect?” masterrsource.org, February 5, 2009
P. Gosselin, “It’s the dawn of life-saving coal: 2010 consumption jumped 5.4%--most since 1979,” notrickszone.com, October 7, 2011
China Environment Series, Issue 11, 2010/2011, Jennifer L. Turner, Editor, Woodrow Wilson International School for Scholars, Page 8
Jack Dini is author of Challenging Environmental Mythology. He has also written for American Council on Science and Health, Environment & Climate News, and Hawaii Reporter.
