Archive for August, 2011

I finished Crazifornia’s chapter on the state’s anti-business attitudes last night.  Here’s an excerpt:

Illustration by Albino Kraken

Saving the Planet

The law most likely to be compared to the Green Chemical Initiative in terms of its negative impact on business in California is AB 32, the California Global Warming Solutions Act, which requires the state’s greenhouse gas emissions to be reduced to 1990 levels by 2020.  John Laird, Jerry Brown’s Secretary of Resources, authored the law when he was in the legislature, and now he has immense regulatory power to move it forward. Gov. Schwarzenegger, who, unlike Laird, is reputedly a Republican, made AB 32 his signature piece of legislation, campaigning hard for its slim passage through the legislature and praising it at the signing ceremony, saying, “Some have challenged whether AB 32 is good for businesses.  I say unquestionably it is good for businesses.  Not only large, well-established businesses, but small businesses that will harness their entrepreneurial spirit to help us achieve our climate goals.”

Not everyone agrees. When the Governor’s Office of Small Business ordered a report on the effects of AB 32 on small business, the authors put the average cost of implementing the law at $3,857 per household, and $49,691 per small business, with an average loss of annual gross state output from small businesses alone of $182 billion, or about a tenth of the state’s gross output. They then helpfully translated that into 1.1 million lost jobs – presumably because companies that can leave California will.

The overall price tag of implementing the bill, which includes a cap and trade provision, is estimated to be well over $100 billion.  It’s already hitting California pocketbooks and accounting ledgers, thanks to a first-in-the-nation fee on greenhouse gas emissions assessed by the California Air Resources Board at a rate of 15 cents for every ton of carbon produced by the state’s utilities and businesses.  The revenues, which will pay for the 175 CARB staffers who are working full-time on climate change research and regulations, will cost California residents $33 million a year, or about $1.50 each, according to CARB estimates.  That works out to $188,571 per CARB global warming crusader – before benefits and pensions, of course.  It will be interesting to see just how accurate that $1.50 estimate is, given California’s longstanding excellence in underestimating the cost of environmental regulations.

More than 250 different types of businesses will have to pay the fee, with an oil refinery paying about $1.3 million a year and a cement plant about $200,000, and passing the cost on to consumers.  Of course, that estimate is just for the money collected and doesn’t include the cost of complying with the new fee, which will add considerably to the cost to the further detriment of California’s business environment.  As a spokesperson for the California Manufacturers and Technology Association said upon CARB’s approval of the fee, “Every additional cost adds burden to our already very high cost of doing business in the state.”

California voters stood by AB 32 in the 2010 election, smashing Prop 23 in 2010, which would have delayed its implementation, again showing their willingness to put environmental idealism ahead of economic pragmatism.  In the heat of the campaign, a green jobs industry association spokesperson said Prop 23, not AB 32, “would be the real job-killer,” arguing that passage of AB 32 has generated green job growth – up by 36 percent from 1995 to 2008 – while total employment grew by only 13 percent. AB 32 was passed in 2006, so how it gets credit for 11years of purported green job growth before its passage is unclear – just as it’s unclear whether California is getting any green job boost at all, or whether it’s all hype – and California is definitely the leader in green job hype, teaching President Obama a thing or two, even if regulation and labor costs make it hard to manufacture a solar panel in the state..

Long before President Obama picked up the green jobs theme – and Californian Van Jones to promote it – Gov. Schwarzenegger was promising that if AB 32 passed, California would be a magnet for green industries and the wonderful jobs that come with them.  And way back in 1988, Gov. Brown suggested Oakland could become a green industry “ecopolis” with bountiful new high-paying jobs – some of the first green job hyperbole by an American politician.

Jones, now once again based in Oakland after being forced out of the Obama administration, recently told the New York Times, “I won’t say I’m not disappointed” about the failure of green jobs to materialize.  A study by the Brookings Institution found green jobs constitute only two percent of the national workforce, and only 2.2 percent of the Silicon Valley workforce. In fact, the Silicon Valley lost green jobs in the years since AB 32 passed, and in July 2011 had an unemployment rate of 10.5 percent versus the national rate of 9.1 percent.  The spokesperson of one San Jose green jobs company that hires engineers and marketers in San Jose but outsources its manufacturing the China told the Times the prospects for green jobs in California remain bleak for reasons that should surprise no one – taxes and labor rates.