Proposition 23 on the Nov. 2 ballot would delay implementation of California’s Global Warming Solutions Act of 2006 (Assembly Bill 32). A recent study from the California Small Business Roundtable deals with the economic costs of that legislation.
“The Cost of AB 32 on California Small Businesses” argues that such legislation would result in a total loss in state output of $182.6 billion annually, which translates to a loss of 1.1 million jobs statewide. For their part, proponents of the bill tout gains from energy efficiency and green jobs. On this theme, the experience of other countries is worth considering.
A study published by the Juan Carlos University of Madrid, and backed by the Spanish government, found that for every green job created, 2.2 jobs were destroyed in other sectors of the economy due to redirected resources. The study concluded that “the Spanish/EU style ‘green jobs’ agenda now being promoted in the U.S. in fact destroys jobs.”
In Italy, each green job cost 6.9 industrial jobs and 4.8 jobs across the entire economy. Even green jobs such as a solar panel manufacturing are predominantly located in China where labor is cheap, energy cheaper and emissions regulations lax.
Implementing rigorous legislation in an effort to reduce our own nation’s emissions and effectively pushing manufacturing-intense industry to higher-emitting places like China may actually be more detrimental to the global environment than maintaining those jobs on American soil. This damages the U.S. economy, exacerbates greenhouse gas emissions worldwide, and begs the question of whether, comparatively, any American job is a green job.
The Global Warming Solutions Act of 2006 calls for a reduction in greenhouse gas emissions in California to 1990 levels by 2020, with the end goal of obtaining an 80 percent reduction by 2050. The measure fails to address comprehensively the negative externalities of increasing domestic energy costs, and the debate is far from settled.
It is dangerous to assume that one piece of legislation in one U.S. state can solve what purports to be global problem. It cannot, and on the economic front, there is little room for doubt. Unemployment in California is now a record 12.4 percent, and the state economy remains in recession.
Instead of implementing a regulation that imposes high costs upfront only to promise payoffs that are delayed and uncertain, California would benefit from considering the experience of Spain and Italy with green job agendas in terms of overall job loss, which in California’s fragile economic state would prove to be downright catastrophic.
Julie Kaszton is a research fellow in Economics and Environment at the Pacific Research Institute.