Cutting greenhouse gas (GHG) emissions is good for the economy, according to a report released last week by California air regulators. The report stated that cutting GHG emissions over the next 12 years will benefit the state’s economy and save Californians money. The state’s economy will grow faster if it cuts emissions than if it did nothing.
The report estimates that emissions cuts will boost CA’s economic production by $27 billion in 2020, an increase of less than one percent of what it would be without emissions regulations. The report also estimated that 100,000 jobs will be created, many of them for low-skilled workers. The average California household will save $400 per year by driving fuel efficient vehicles and energy efficient homes. Businesses complying with regulations will also save money because they will become more efficient and use less electricity.
The report’s models show that implementing their recommendations will increase California’s gross state product by $4 billion. It will increase the overall personal income by $14 billion, and increase per capita income by $200. The business sector will benefit from enhanced growth, and small businesses experience a “slight net economic benefit.”
The report offers the most comprehensive projection of the economic consequences of California’s 2006 GHG emissions law, AB 32 or the California Global Warming Solutions Act. The Act requires the state to cut its emissions to 1990 levels by 2020, a reduction of roughly one-third.
According to the report, if California implements the air board’s recommendations “not only will the economy grow by a similar amount as we move toward 2020,but it will grow at a slightly higher rate.”
“This is the green-light analysis that says we should keep pushing on this,” said James Fine, an economist at the Environmental Defense Fund. “It’s only going to help our economy, not hurt it.”
“Our historic effort here in California to deal with the crisis of global warming will also have a benefit of saving our businesses and residents money,” said state Air Resources Board Chairwoman Mary Nichols.
GE chairman said emissions reductions good for economy
Last July chairman and CEO of General Electric (GE) Jeffrey Immelt said cutting GHG emissions is good for the economy during a speech at the Western Governors’ Association meeting.
‘This notion that business is just going to stop if we embrace clean energy and clean water is just rubbish,” Immelt said. “It’s just not true. On the contrary, if the federal government could come up with an intelligent policy on carbon emissions — whether it be through a carbon tax, a cap-and-trade system or otherwise — which offers industry some certainty regarding the cost of emitting carbon for the next 10 to 15 years, businesses will adjust and innovate and figure out how to ‘make a buck.”
GE invested $3 billion in ‚Äògreen’ energy last year. Over five years ago Immelt decided GE would adopt the Kyoto protocol. “I thought it would cost us money,” Immelt said. “It’s turned out to save us money.”
Consumer lifestyles won’t change
“You may have different lightbulbs and your car may be made of different materials but basically we’ve assumed that consumer lifestyles stay constant,” said Jack Stephenson, a director of McKinsey, the management consultancy firm that released a report in December. The report stated that the U.S. will be able to reduce GHG emissions one-third by 2030 at a minimal cost to the economy.
Emissions reductions can even occur at no cost to the economy, the report stated, if they are offset by more energy efficient cars, homes and businesses.
“We can get on a path to stop global warming in a way that’s not going to hurt the economy,” said Richard Duke, a Natural Resources Defense Council director.