Surprise: California Climate Law Won't Devastate the Economy!


Photo via NY Times

Perhaps the most frequent argument we hear against any energy reform that would require pricing carbon is this: It would cripple the economy. It would devastate the economy. You know, that sort of thing. As the popular argument goes, making the nation's worst polluters pay for their carbon pollution amounts to--"let's call it what it is!" (sound familiar?)--an "energy tax" on the American people, who, after paying it, become crippled and/or devastated. Thankfully, this argument has time and again been showed to be bunk, and his has revealed to be so yet again--this time by a report on the consequences of California's bill, signed into law by Governor Schwarzenegger, which will bring the state's greenhouse gas emission levels down to 1990 levels by 2020. The report, conducted by the Air Resource Board with input from scientists and academics, reveals that the bill will only have a minimal impact on the state's economy, and will actually lead to modest net job gains.

Reuters reports:

The analysis by the state Air Resources Board, the chief regulator of the law, forecast higher energy prices from new regulations and a cap-and-trade system for greenhouse gases, but said greater energy efficiency would keep costs manageable in the trend-setting environmental state.

It concluded that the measure will yield modest job gains statewide, will have a negligible effect on the state's overall economy -- the eighth largest in the world -- and could benefit some sectors like alternative energy businesses.

Which is precisely what such a bill is intended to do: shift the rudder from dirty to clean power as painlessly as possible. Let's not try to gloss over the fact that energy reform will eventually necessarily cause some pain (as I have been guilty of occasionally doing, admittedly) in the form of lost mining, manufacturing and utilities jobs, as this report points out. But the net benefit is far greater, as more jobs will be added than were lost to clean energy and service sectors--while simultaneously reducing greenhouse gas pollution, and, you know, mitigating climate change.

As far as that 'energy tax' charge, fear not--part of the bill includes a mechanism that returns consumers a tax rebate to cushion the blow from higher energy costs, which is paid for by the pollution credits purchased by polluting industries. So, once again, we see with this report that a transition to a clean energy economy is possible without terrible consequences for the economy as a whole--and that's not even taking into account all of the jobs and wealth that could arise from the innovation such a bill would spur. Seeing as how clean tech is primed to be the next major industry worldwide, it could end up being the biggest economic boon California has seen since the tech boom of the 90s.

More on Clean Energy Reform and Economics
How the Economics of Renewable Energy Have Been Validated
Investment in Clean Energy Top Priority in US's Economic Future

Tags: California | Carbon Emissions | Economics | Global Climate Change | United States

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