Will AB 32 have any real impact on emissions?

By Janice Keating

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When times are tough and money is scarce, it is the duty of locally elected leaders to ask tough questions about government programs. No program should be exempt from this scrutiny, including Assembly Bill 32 (the Global Warming Solutions Act), which is one of the largest regulatory schemes ever approved by the state of California.

AB 32 will impact every citizen directly in the form of higher prices for gasoline and increased utility costs. Virtually every product and service we purchase will be impacted as businesses pass along their increased costs to consumers.

With many scientists believing that the release of greenhouse gases is at least contributing to global warming, it is understandable that many Californians believe something should be done to reduce emissions. The question is, will implementation of AB 32 have any real impact on carbon emissions?

Looking to Europe as a model, where AB 32-style regulations have been in place for several years, the results are less than encouraging. Total emissions have continued to rise each year in Europe despite a carbon credit trading scheme similar to that proposed in California.

What will AB 32 cost? Here are some examples based on the California Air Resources Board’s analysis and other reports:

$11 billion per year for a Low Carbon Fuel Standard, which will result in higher gasoline and diesel costs;

11 percent increase in electricity costs;

8 percent increase in natural gas costs;

Increased costs of $50,000 for a new home to comply with new green building standards.

AB 32 will further harm businesses and families, meaning lower tax revenues for local governments and higher demand for social services.

The AB 32 scoping plan acknowledges that most small businesses will have a hard time paying the costs of AB 32 implementation. These businesses are likely to have to lay off workers or close altogether, taking revenues and jobs with them.

Food banks and homeless shelters already are reporting exponentially increasing demand for their services as the economic crisis worsens; AB 32 costs are likely to force even more families to seek public assistance.

AB 32 will make California less competitive with neighboring states and other countries. As costs rise here, businesses continue to leave for other states with less stringent regulations. As a result, California won’t be reducing global warming, but we will be reducing employment and tax revenues at a time we can least afford it.

It is instructive to note that other countries have dramatically scaled back or suspended their global warming reduction plans due to the economic crisis. German Chancellor Angela Merkel recently stated her opposition to any global climate deal that would endanger jobs or investments in Germany. With the European Union, the world leader in climate change regulation, stepping back from the brink, it would seem appropriate for California to re-evaluate implementation of the current regulations.

The recently adopted AB 32 Scoping Plan, the blueprint for this incredibly ambitious policy initiative, failed to recognize the economic challenges facing our state and the nation. Like many overly optimistic government projections, it failed to account for the full costs of programs required to achieve the energy efficiency savings it projects will be realized in 2020. By underestimating the costs, and overestimating the savings, the Scoping Plan threatens to balloon the state’s already disastrous budget deficit and subject the private sector to billions of dollars in additional costs.

Before moving forward on any new rules or policies under AB32, the California Air Resources Board should direct its staff to accurately calculate and disclose the near and midterm costs of each and every proposed Scoping Plan policy and adopt only the most cost-effective approaches to meet AB 32’s emission- reduction goals.

The goals of AB 32 may be worthy, but the state’s plan for implementing it is dangerously flawed. In addition to taking a common-sense, fiscally responsible approach, we should consider whether the task of tackling climate change isn’t more appropriately addressed at the national or international level, so meaningful results can be achieved and costs fairly shared. It is unreasonable to expect citizens of our state to disproportionately bear the burden.

Keating is a Modesto City Council member and active with the AB 32 Implementation Group, comprised of business, taxpayer and consumer groups statewide.