The ongoing fight over California’s Assembly Bill 32, the Global Warming Solutions Act, isn’t really about combating climate change. It’s about jobs and profits and — more important — losses.
On Tuesday Californians will vote on Proposition 23, which is dubbed the California Jobs Initiative by its backers and called much less charitable names by its opponents. The purpose of the initiative is to soften the effect of AB 32’s draconian rules and regulations, which are aimed at reducing greenhouse-gas emissions 25 percent by 2020. According to Prop. 23 supporters, those regulations will worsen the state’s already awful economy and raise unemployment even beyond its current desperate level.
The measure would suspend most of the regulations associated with the law until the state’s unemployment rate drops to 5.5 percent or lower for four consecutive quarters. Currently, unemployment in California is holding stubbornly around 12.5 percent. The jobless rate was just 5 percent when the legislature passed the bill in 2006.
Tellingly, the No on 23 campaign has had little to say about how AB 32 would save the planet from the imagined ravages of “global climate disruption.” Instead, opponents, including the Sierra Club, Greenpeace, Bill Gates, and even Gov. Arnold Schwarzenegger (R.), have argued against the initiative on economic terms — scoffing at the threat of unemployment posed by AB 32 while making wildly implausible claims about ”green jobs” and indulging in plenty of business-bashing.
Schwarzenegger calls the unemployment argument “bogus.” He’s bashed “out-of-state oil companies,” including Valero, Tesoro, and Koch Industries, that have spent about $4 million on the Yes campaign. “Does anyone really believe that these companies out of the goodness of their black oil hearts are spending millions and millions of dollars to protect jobs?” the governor asked recently.
Regardless of the companies’ motives, California’s oil and gas industry accounts for more than 364,000 jobs, directly and indirectly. And Schwarzenegger isn’t at all bothered that the No on 23 campaign has outspent proponents by more than two-to-one, thanks largely to donations from rent-seeking alternative-energy firms and hedge-fund managers who stand to reap millions from state subsidies if AB 32 goes into effect as planned in 2012.
Instead, AB 32’s partisans insist the law will have salutary economic effects . . . eventually. They point to an assortment of rosy analyses from various environmental groups, along with a warning from the nonpartisan state Legislative Analyst’s Office, which said suspending AB 32 could “dampen additional investments in clean energy technologies or so-called ‘green jobs’ by private firms, thereby resulting in less economic activity than would otherwise be the case.”
A moment’s thought dismisses that argument: It stands to reason that investment in ventures mandated by the government would fall if the mandates are removed, but they’re mandated precisely because they don’t make economic sense.
Prop. 23 opponents usually gloss over another LAO report, published in March, which concluded that the implementation of AB 32’s regulations “will result in the near term in California job losses.” Furthermore, the analyst noted, “In the longer term, the employment effects in our view are unknown and will depend on a number of yet-to-be determined factors. These include future energy prices, technological developments in the energy area, normal adoption by households and businesses of increasingly efficient energy technologies even without AB 32 in place, legislative actions . . . and the state of California’s economy.” Not so rosy.
Less rosy still is a little-noticed and little-discussed draft report circulated last year by the California Air Resources Board’s economic and allocation advisory committee. In it, the panel seriously contemplates using some of the hundreds of millions of dollars the state hopes to collect in carbon “allowance fees” to pay the unemployment benefits of people thrown out of work by new regulations.
And that’s not all. “Some firms are likely to experience a reduction in profits as a result of AB 32,” the draft report says. “This burden depends on the extent to which costs rise and the extent to which firms can pass these cost-increases forward to consumers.” Those candid assessments somehow did not end up in the committee’s final report, published in January.
Although AB 32’s supporters tout the virtues of “green jobs,” the Sacramento Bee showed in an October 13 story how those jobs — which count low-tech professionals such as insulation installers among their numbers — cannot possibly fill the state’s job vacuum fast enough.
“While green jobs expanded by 36 percent from 1995 to 2008,” the story notes, “putting to work even a tenth of California’s unemployed over the next three years would require green job numbers to grow 17 times more quickly.”
So forget about putting hope in imagined future “green job” growth. What opponents of Prop. 23 want voters to ignore is the fact that California’s greenhouse-gas law will harm the broader economy now while enriching a politically favored few. AB 32 may put the squeeze on rich Texas oil refiners, but the law will raise prices at the gas pump and on grocery-store shelves in the state.
Embarking upon job-killing regulations amid 12.5 percent unemployment and a sluggish economic recovery right now is the height of folly. California’s voters should bear those facts in mind when they head to the polls on Tuesday.
– Ben Boychuk is an editor for the Heartland Institute and a columnist for the Sacramento Bee in California.