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Five Reasons Why AB 32 Will Boost California's Economy

Frances Beinecke

Posted August 17, 2009 in Green Enterprise, Solving Global Warming

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I remember three years ago when NRDC worked so hard to get AB 32 signed into law. I knew then that it would help confront the crisis of global warming. What we've seen since then is that AB 32 can also help California confront another crisis: the economic meltdown.

In the face of California's budget woes, the State economy needs a jumpstart--an investment-driven model that builds real economic and infrastructure value. Clean energy and climate solutions fit the bill.

Just look at the numbers. Green jobs are growing 2.5 times as fast as traditional jobs, and California's clean energy economy has attracted more than $6.5 billion in venture capital in the past three years. Full implementation of AB 32 will dramatically expand those figures.

Some of the same industry lobbyists who opposed AB 32 in the first place are now claiming that California can't afford to move into the energy future, that it must give up its role as the nation's leading innovator. What they are really saying is no to jobs and opportunities for Californians.

1. AB 32 Will Create Jobs in California

Between 1998 and 2007, clean energy economy jobs--a mix of white and blue-collar positions, from scientists and engineers to electricians, machinists and teachers--grew by 9.1 percent nationally while traditional jobs grew by only 3.7 percent. California was home to the greatest number of these jobs.

But the job opportunities don't stop with the energy sector. Over the last 35 years, energy efficiency measures have enabled California households to redirect their expenditures toward other goods and services, creating about 1.5 million full-time jobs with a total payroll of $45 billion.

And for every new job foregone in California's oil, gas, and electric power sectors between 1972 and 2006, more than 50 new jobs have been created across the state's diverse economy as a result of energy efficiency.

2. AB 32 Will Save Consumers Money on Energy

Opponents try to claim that AB 32 will raise energy prices, but their assertions don't hold water because they don't take into account the enormous economic savings of energy efficiency.

Anyone who has ever owned a fuel-efficient car, installed a CFL, or an energy star appliance knows that energy efficiency saves money. The Cash for Clunkers Program is a good example of how people will make smart energy choices given the right incentives. The new fuel-efficient cars consumers are choosing will save an average of $1,000 per year.

Californians have already reaped the benefits of efficiency. The state's appliance and building standards have saved Californians over $56 billion since the 1970s-that's the equivalent of $1000 per household. Californians use less electricity per capita than the rest of the country.

The energy savings from AB 32's increased efficiency policies are expected to save California $20 billion annually by the year 2020.

And remember, relying on the same old dirty fuels is costly. The price of driving a mile in the U.S. nearly doubled between 2002 and 2007, a steeper jump than in any six-year period since at least 1960. Last year about 5.7 percent of the average U.S. household's spending went to gasoline.

3. AB 32 Will Bring More Private Investment to California

In the current economic crisis, businesses are having a hard time getting financing, but AB 32 will drive investment into California's energy-related research and development. It will send a clear signal that the demand for clean energy solutions will boom in California and that investments in these sectors will pay off.

The numbers are already bearing out. In the second quarter of 2008 alone, California-based companies received approximately 40 percent of clean tech investments, with a record $794 million in 21 investments.

4. AB 32 Has the Support of Business, both Big and Small

Many California businesses see opportunity in the law's implementation. It's no wonder, considering that the California Air Resources Board, the agency responsible for implementing AB 32, found that AB 32 will result in increased economic production of $27 billion, increased overall GSP of $4 billion, and increased overall personal income by $14 billion.

This includes large businesses--the utility sector, manufacturers, venture capitalists--and small. Indeed Small Business California, a nonpartisan, grassroots, small-business advocacy organization pushed hard for the passage of AB 32, because, as its president Scott Hauge told the Senate Committee on Small Business and Entrepreneurship, it will boost small businesses because it will reduce energy costs and create new opportunities for innovation--something nimble smaller companies can excel at.

5. AB 32 Will Protect California from the Costs of Extreme Weather Events

Unchecked global warming would be devastating to California's economy. The state is vulnerable to intensified droughts, wildfires, floods, and sea-level rise, and if we fail to prevent these, the costs will soar.

Combined estimates show that Californians could face from $200 million to $1.4 billion in additional annual water damage costs from climate change and from $100 million to $2.5 billion in additional annual fire damage costs, depending on the level of warming.

Meanwhile, the public health sector faces from $3.8 billion to $24 billion in additional annual costs associated with climate change impacts.

 

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Comments

Ken JohnsonAug 18 2009 01:04 PM

This Friday, Aug 21, U.S. Rep. Henry Waxman and CA Sen. Fran Pavley will be hosting a public forum that will focus on "California’s role as a national leader on climate policies and the interplay between the California Global Warming Solutions Act (AB 32) and the American Clean Energy and Security Act (HR 2454)". (The forum will be webcast.)
http://www.ioe.ucla.edu/cccs/ClimateChangeForum/

A concern of CARB and several environmental interest groups is whether ACES could perversely nullify the environmental effectiveness of state and local policies such as AB 32 by allowing any resulting emission reductions to be traded for equivalent emission increases elsewhere. This concern was raised in NRDC's July 7 testimony to the Senate Environment and Public Works Committee: "The bill should also provide a means to assure that the carbon reduction benefits of these state energy efficiency and renewable energy deployment programs will not be lost when we have a national carbon cap. ..."
http://www.nrdc.org/globalWarming/files/glo_09070701a.pdf (p 24-25)
See also the following policy brief:
"Preserving Additionality of Complementary GHG-Reduction Actions Under Waxman-Markey"
http://ssrn.com/abstract=1421947

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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