Like many people, I consider myself to be “pragmatically green.” That is, I like to do the sustainable things that are easy to do and that make sense to me – we are installing energy efficient windows and duo flush systems in our new house; my next car will probably be a hybrid or will be capable of running on alternative fuel sources; we look for energy star on the consumer goods we purchase; we go to great lengths to recycle our waste; and we even have a thriving worm compost bin in our office (something that CalEPA abandoned because it was too inconvenient, BTW). We’ve grown accustomed to the gnats that fly around the worm bin, and somehow it has added to the quaintness of our office.
There are limits though – I don’t do the things that are unproven or are too costly. However, the California Air Resources Board (CARB) is pushing the entire state down an untested and costly path. CARB’s current AB 32 plan includes proven best practices, like cogeneration and vehicle fuel standards, as well as more experimental programs like the low carbon fuel standard that rely on currently undeveloped technology. The costs of these programs vary accordingly, with some yielding net savings and others imposing dramatic new costs on California’s consumers and businesses.
In our study for the California Manufacturers and Technology Association, we found that California’s businesses and consumers will cumulatively pay an additional $135 billion for energy and goods by 2020 for AB 32. On an annual basis, these costs would exceed $35 billion per year by 2020 – this is equivalent to about 40 percent of California’s General Fund tax revenues.
So what does this mean to California’s family? Our analysis shows that the average California family will be forced to pay an additional $2,500 every year by 2020 even under optimistic conditions – this is equivalent to more than 2 additional mortgage payments per year.
As families have less money to spend and as businesses’ costs increase, the economy will further slow and California’s ability to sustain jobs will be weakened. California currently has the third highest unemployment rate in the nation and higher costs will only make it harder to sustain jobs in an already lagging economy. Our study found that California will have 262,000 fewer jobs by 2020 as a direct result of implementing AB 32 as envisioned by CARB.
Our study further shows that California’s state and local governments would lose $7.4 billion in annual tax revenues as a result of these regulations. Of this, the local share amounts to $640 million and the state’s share amounts to $6.8 billion, roughly equivalent to the amount that is needed to fund the Governor’s entire Local Realignment initiative or more than a decade of funding Children’s Medical Services program under the Department of Health Care Services. At a time when our state and local budget deficits are perpetually in crisis we can’t afford to lose these tax dollars.
California can and must do better. No study (including ours) has thoroughly assessed the cost-effectiveness of CARB’s AB 32 programs, even though the law clearly states that CARB must articulate the maximum cost-effective solution. But our study strongly suggests that greenhouse gas reductions can be achieved much more cost-effectively than what has been articulated by CARB.
I am currently thinking about putting solar panels on my roof. If I straight out buy it, it wouldn’t pay for itself for a long time. But I haven’t given up the idea and am thinking about signing a long-term agreement for the service. I haven’t figured it out yet, but there has got to be a better way. Similarly, there has got to be a better way to reduce greenhouse gas emissions than the risky and costly way articulated by CARB. It’s time to reevaluate CARB’s AB 32 policies. California can only be an environmental leader by moving forward in a smarter, more cost-effective manner.
(Andrew Chang is the Managing Director, Andrew Chang & Company, LLC. Originally posted on Fox & Hounds.)