NCPA - National Center for Policy Analysis


September 18, 2006

Arnold Schwarzenegger's signing of the first statewide, multi-industry greenhouse gas emission limits will result in higher prices for the states' consumers, higher unemployment for its workers and little or no benefit for the environment, says H. Sterling Burnett, a senior fellow at the National Center for Policy Analysis.

The law will require companies in selected industries to reduce their greenhouse emissions by whatever amounts, and by whatever methods, are deemed necessary by the California Air Resources Board in order to reduce emissions for the entire state by 25 percent by 2020 -- equaling California's 1990 emission levels.

While California is an economic powerhouse and these cuts are substantial, their effect on future climate will be nil, says Burnett: 

  • An analysis of a regional climate change action plan considered by 11 Northeastern states and the premiers of Canada's eastern provinces showed that even with an efficient cap-and-trade program similar to Schwarzenegger's proposal, both electricity and residential natural gas prices would rise by as much as 39 percent by 2020.
  • The higher energy costs would result in consumption falling by an estimated average of $2,634 per household; gross state product would decline 1.1 percent; and an estimated 191,589 jobs would be lost by 2010.
  • The study also found that as companies fled high fuel prices in the Northeastern states, employment in the rest of the United States would increase by more than 117,000 in 2010 and by an additional 59,000 in 2020.

Additionally, Californians face some of the highest energy bills in the nation -- which this law will only make worse.  Proponents of the law argue that it will create new jobs through investments in, and the manufacturing of, new technologies.  However, these gains will not be realized in California, says Burnett.

Source: H. Sterling Burnett, "California loses with greenhouse law," Sacramento Bee, September 16, 2006.


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