by Mary Zhu
AB 32, passed in 2006, designated the California Air Resource Board (CARB) to develop regulations and market mechanisms to reduce California green house gasses (GHG) to 1990 levels, a decrease of 12%. Reductions would begin in 2012 and gradually reach the goal of 12% reduction by 2020.
Interestingly, the proponents of Proposition 23 are not arguing the science that points to our need to reduce GHG. Instead, they claim AB 32 will lead to increased costs and taxes and job losses. Could this possibly be right or is this just the usual corporate greed manipulating the electorate and public policy?
The study that supporters of Proposition 23 cite is the only one that supports their claims. This is the June 2009 analysis of Varshney and Tootelian of the Sacramento State University, Business Department. Their report was funded by the California Small Business Roundtable. Using CARB data, they calculated a loss of more that 1 million jobs, nearly $77 billion in lost income and nearly $6 billion in business taxes if AB 32 is implemented.
Their analysis has been evaluated by the nonpartisan Legislative Analyst’s Office as “highly unreliable” and by James Sweeney (2/16/10), Director, Stanford Precourt Institute for Energy Efficiency, as “highly biased, based on false logic and unsound economic analysis.” Sweeney was not funded for this work. Here are only three of his several point by point critiques.
1. The Varshney/Tootelian report only included projected costs; they discounted the savings from fuel efficiency as too speculative to consider. Sweeney argues that savings will accrue because they are based on federal standards of fuel efficiency. Using the same CARB data, but including savings, Sweeney finds a gain of $15.5 billion to the state.
2. Varshney/Tootelian inflated the cost passed down to consumers by assuming that businesses will charge customers double the actual costs to businesses. 3. Varshney/Tootelian chose to ignore the economic stimulus of new green energy companies and construction and only focused on jobs lost.
CARB’s economic analysis of March 2010 concluded that AB 32 would not affect California’s modest economic growth rate of 2.4% in the period 2006 to 2020. It will produce a 4.9% decrease in fuel expenditures and a reduction of 15% in GHG emissions.
These conclusions are consistent with the analysis of a group of 118 Ph.D. economists with expertise in California climate and energy issues. In their open letter, “The Most Expensive Thing We Can Do is Nothing ” (UCS, 8/12/10), they strongly disagree that the current recession should delay implementing AB32. Delay will increase the cost of later mitigation of environmental degradation. Decreasing local pollutants now will yield immediate benefits in health and welfare.
In summary, the only analysis that supports Proposition 23 has been soundly discredited by several diverse sources. Without a factual basis for Proposition 23, we are left with the conclusion that the money behind this bill is, in fact, corporate greed acting in total disregard for our California economy, environment and health.
And what is the current record holder for the most expensive campaign? The $154 million winner is Proposition 87 in 2006. This bill would have imposed a fee/tax on producers of oil extracted from California. At 230 million barrels of oil from California in 2005, these taxes would generate $4 billion over 10 years.
These revenues would be applied to alternative energy programs, with moneys distributed to California institutions and businesses. The points made in 2006 were that, while California is the third largest oil producing state, pays the highest gas prices and has the second worst air quality, it is the only state that does not collect an oil extraction fee. The opposition cited Big Government and the lack of absolute certainty in the implementation of this proposal. (League of Women Voters, 11/06.) The donors against this proposition were Chevron, AERA Energy and Occidental Oil and Gas (Public Policy Institute of California, 4/06). Prop 87 was rejected, 55% to 45%.
So in 2006, we let Big Oil evade their fair share of taxes. Too bad. Those revenues would be welcome today, as we confront draconian cuts in public services and/or increased personal taxes. And we could have grown local, private enterprises in sustainable energy.
Don’t let Big Oil put one over us again; get involved. The Union of Concerned Scientists has produced a mini documentary to screen at several national meetings on “The Dirty Energy Proposition: How Texas oil companies are trying to block clean energy progress in California. Please join us Thursday, September 23 from 7 to 8:30 PM at the Davis Community Church, 412 C Street, Davis. For additional information, go to: http://ucsusa.org/houseparty.