State warms to green proposal
Few dispute that reducing planet-heating greenhouse gas emissions is a good idea. But fewer still know how much it will cost.
Wednesday, California officials served up their official economic analysis of the state’s ambitious global warming plan: By 2020, it would boost the state’s expected $2.6-trillion gross product by $4 billion, create 100,000 additional jobs and increase per capita income by $200, the state Air Resources Board concluded after months of complex modeling.
“These are good-news numbers,” board Chairwoman Mary Nichols said. “We are not claiming this is the way to economic salvation. But making our state more energy-efficient and less reliant on imported oil . . . will have a net positive effect.”
California is poised to adopt the nation’s most comprehensive plan to slash emissions of carbon dioxide and other greenhouse gases, which come mostly from burning fossil fuels.
A draft blueprint, to be finalized by the end of the year, would force utilities to produce a third of their electricity from solar, wind and other renewable sources, require automakers to sell cars that are more fuel-efficient, and wedge energy-saving measures into home-building, manufacturing and other sectors of the economy.
Business groups attacked the analysis, saying the state’s plan would cause companies to flee to states or countries with less restrictive laws.
“The plan assumes all these investments by businesses, utilities and consumers,” said Dorothy Rothrock, vice president of the California Manufacturers and Technology Assn. “Where will all the upfront capital come from?”
Utilities already have said they will fall short of complying with a current law requiring 20% of their electricity to come from renewables by 2010. The state has yet to figure out how to implement plans to lower the carbon content of gasoline and other fuels.
Nichols acknowledged that hiking the renewable-energy portion of a utility portfolio to 33% may increase electricity rates, but that would be offset, she said, by efficiency measures that would decrease overall power use. The analysis projects that the average electricity bill would drop 5% in 2020.
As for capital, she said, “Investment money is available for clean and green technology in California. It is in the billions. Investors are out there looking for a place to spend it.”
In the second quarter of 2008, California topped world investment in clean-technology venture capital, receiving $800 million of the global total of $2 billion, the report said.
Whether California’s global warming law results in “a small overall positive impact” on its huge economy, as the report puts it, or a modest cost, “there is a strong argument that this is the right thing to do,” said James Bushnell, research director of the University of California Energy Institute in Berkeley. “This is a policy to reduce greenhouse gas emissions, not an economic stimulus package.”
But Bushnell said that getting individual households and businesses to implement energy efficiency measures wasn’t easy.
“This is a situation where people are apparently not doing something that is in their best interest,” he said. “It is a mystery and a major policy challenge. It will require a major adjustment in how Californians produce and consume energy, ranging from the cars they drive to the appliances they own.”
The air board’s economic analysis acknowledged that effects will vary among different sectors of the economy. The agriculture, fishing and forestry sector would see 3.7% growth by 2020, partly because of investment in forestry for storing carbon, Nichols said.
Two sectors would suffer: Utilities would experience a 15.9% drop in output and a 13.8% drop in employment because households and businesses would need less power as they conserve more energy, according to the analysis.
The retail trade sector is projected to drop 1.5%, mainly because of a decrease in retail sales of gasoline.
In another report released Wednesday, the board found that reducing greenhouse gas emissions would result in an estimated 300 fewer premature deaths in 2020 and slash the number of cases of asthma and other respiratory illnesses by 9,000.
The loss of 53,000 work days would be avoided, the analysis found.