California’s Prop 23 Would Put the Brakes on Clean Energy

By William A. Sundstrom

With the state’s unemployment rate stuck at around 12 percent, many Californians are suffering and desperate for a paycheck. Exploiting their pain, two Texas oil companies, a pair of out-of-state billionaires, and other backers of Proposition 23 hope to convince voters to effectively repeal California’s landmark clean energy law in the name of protecting jobs.

In fact, passing Prop 23 would protect fossil fuel industry profits, not jobs, which explains why it is being bankrolled by the Valero and Tesoro Texas oil companies and a Kansas-based company owned by the Koch brothers who made their fortune in the oil and gas industries. Rather than protecting jobs, Prop 23 would indefinitely delay sensible measures to create a clean energy economy.

Prop 23’s target, the Global Warming Solutions Act (AB 32), requires California to reduce emissions of heat-trapping pollution to 1990 levels by 2020, and it lays the groundwork for cost-effective means of achieving this goal, including market-based “cap and trade” regulation. As an economist who teaches environmental policy, I was delighted to see California adopt an approach that economists have urged for years—one that harnesses market incentives and competition to achieve pollution reductions at minimal cost.

What does clean energy mean for employment? The net impact on California’s employment picture is likely to be so small as to be barely noticeable in the unemployment statistics. While some of our clean energy law’s provisions will add to the short-term cost of doing business, most independent estimates find these costs to be quite modest. Offsetting these transitional impacts will be new “green jobs” in the renewable energy and energy efficiency sectors. Clean technology is a growth industry, and California has been a significant beneficiary of that growth. Venture capitalists poured $2.1 billion in “clean economy” investment capital into California in 2009 alone, 60 percent of the total in North America.

But the biggest reason that California’s clean energy law will have little impact on the employment situation is that California’s economic crisis is first and foremost a product of the financial crisis and the resulting global recession, not state energy policy. Why California’s unemployment rate is higher than the national average is subject to debate, but likely suspects include the severity of California’s real estate collapse, along with the poor fiscal condition of our state and local governments.

Prop 23 would create regulatory uncertainty that could compound the damage to California’s economy for years. Regulations work best when they are stable and predictable, so businesses and consumers can make plans to adapt to them. Prop 23 would render such plans contingent on an unknowable future path of the state’s labor market, creating unnecessary costs and further delays.

While California can’t solve global warming on its own, we know our leadership is necessary and can make a difference. There are two reasons we must move forward. First, California is a huge economy and a significant source of global warming pollution in its own right. Second, what our state learns about clean energy alternatives and market-based climate policies will have a ripple effect well beyond our borders.

If global warming continues unchecked, the long-run impacts of coastal flooding, wildfires, and drought represent a serious threat to our economy and way of life. That’s why when the Union of Concerned Scientists invited me to sign an open letter from more than 100 Ph.D. economists urging Californians not to delay implementing AB 32, I was glad to do so, and I urge you to join me in voting No on Prop 23 in November.

William A. Sundstrom is Professor of Economics at Santa Clara University. He teaches courses in microeconomics, economic history, labor economics, ethics and economic thought, and the history of economic thought. His research interests are in American economic history, especially the history of labor markets, and the economics of racial discrimination.


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4 responses

  1. Mr. Governor Arnold Schwarzenegger, please use a budget trailer bill to improve Smog Check performance. Cancel remote sensing to improve the air and the State financial condition. Support HR1207Paul

    CAPP believes an in-field vehicle repair audit program could create maximum vehicle owner satisfaction. And provide a mechanism for continuous improvements in how vehicles are repaired so that customers will be better satisfied with repairs made under the Smog Check program.

    Our proposal:

    “44036 (b) To achieve the goal of consumer protection and quality assurance, the department is directed to adopt in-field audits using known vehicle defects. The in-field audits will be used to determine if a technician does actually detect, diagnose and repair the designated audit vehicle defect.

    (c) As there are no clear standards to see that emissions defects are being corrected, these audits are to be conducted without notification being provided to ensure accurate assessment. The improved methods generated by the audits will provide continuous improvements in the quality of vehicle repairs actually occurring.

  2. The biggest concern about Prop 23 and oil industry behind it are people in the Renewable Energy industry who stand to lose billions of dollars in future profits if repealed.
    Renewable Energy projects produce electricity. Electricity is not produced from foreign oil and does not reduce our dependence on foreign oil.
    There isn’t a shortage of electricity. The US Energy Information Agency reports electrical demand declined 3.6% last year. Any PERMANENT (non temp construction) RE jobs will be offset by closure of conventional power plants because we don’t need the electricity. OH DUH!!!!!!!!!!!!!!!!!!!!!!!!

  3. A new study actually shows that Prop 23 could add nearly 150,000 jobs in California in 2011, more than a half million jobs by 2012.

    (The study’s estimates are based upon the future reductions in total energy consumption attendant upon the implementation of AB 32, as estimated by CARB, and the historical relationships among employment, aggregate output, the capital stock, and total energy consumption for California to derive projections of the effect of AB 32 upon aggregate employment in the state)

  4. Yet another propaganda piece. I call it propaganda because you are not covering both sides here. The job and economic numbers fall HEAVILY AGAINST AB 32.

    The “green jobs, which include the trash man and bicycle shop employers, among other “stretch” jobs, as well as the investment numbers, are but a fraction of what we will lose if AB 32 is implemented.

    The key thing to keep in mind is that, according to CARB, AB 32 will do NOTHING to help global warming, will cost jobs and have a negative effect on the economy. This comes from the very people who drew it up!

    AB 32 does nothing for local pollution.

    Prop 23 leaves us with the toughest pollution laws in the country, among the toughest in the world. It will NOT increase local pollution

    If Proposition 23 is rejected, here is what will happen according to expert sources:

    •A 60 percent increase in your electricity bill according to the Southern California Public Power Authority.

    •An 8 percent increase in your natural gas bill according to CARB’s economic analysis.

    •$50,000 more for the price of a new home according to an analysis by the National Renewable Energy Laboratory.

    •$3.7 billion a year more for gasoline and diesel according to Sierra Research.

    •A $1,000-$3,000 additional cost for a new car according to CARB and automaker studies.

    On top of all that, a study conducted for the California Small Business Roundtable found that AB 32 regulations would cost small business alone nearly $200 billion, and would result in more than 1 million lost jobs.

    The more I learn about AB 32, the more I fear it. It just gets worse. Please vote yes on Prop23.

    “”2 Guys on the Bay Area Transportation Board told the CARB people, “If you try to do what you are going to do(AB 32) we’ll have gas at $9.07 a gallon and we have freeway tolls at up to $4,500 a year to drive during rush hour.”

    “Part of the plan is to stop suburban development, get people to stop driving, make driving too expensive for people to live out there, force them to live in high-rises, condos, in the city.”

    For months, John and Ken have made Prop 23 their top priority, calling it a necessary step to stop a law they say will kill jobs and cost Californians a fortune in higher gas and energy prices. With an estimated one million listeners per week, these two guys usually manage to rally enough votes to get their way.

    The video has John and Ken explaining why they think this bill is the most important measure on the ballot.

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