NCPA - National Center for Policy Analysis


April 7, 2010

California has a new global warming law with no real name, just this:  AB32.  Last month, the California Air Resource Board (CARB) proclaimed in a report that AB32 would grow 10,000 jobs.  That is true only if you also repeal basic market economics and the state's current business indicators, says the Wall Street Journal. 

  • AB32 creates a statewide cap and trade program and imposes numerous command-and-control mandates that CARB calls "complementary measures" on businesses, such as low-carbon fuel standards and a goal of achieving 33 percent energy from renewable sources by 2020.
  • Forcing businesses to comply with the complementary measures will make businesses more energy efficient, and this in turn will save businesses money on emissions allowances under cap and trade.
  • Companies say compliance costs will force them to cut jobs and raise prices.  

But if these technologies were really going to save businesses money, why would they be so reluctant to adopt them?  The Economic Impacts Subcommittee of the Economic and Allocation Advisory Committee concludes, "Many of the technologies that would be adopted under AB32 are either yet to be developed or currently prohibitively expensive." 

So how does CARB manage to make cost predictions about technologies that do not even exist?  With a lot of uncertainty, says the Journal: 

  • Most uncertain of all is the projected 10,000 new green jobs, which presumably will be spurred by increased demand for renewable energy and green technology.
  • While CARB indicates the state will lose jobs in mining, utilities, construction, manufacturing, trade and transportation due to cost increases, it underestimates these job losses by failing to take into account businesses leaving for other states or countries.
  • The Economics Impact Subcommittee notes these job losses are more than likely to eclipse the paltry 10,000 new green jobs the report forecasts.  

While almost all of AB32's benefits are speculative and uncertain, its costs are hitting businesses and residents now.  This is one more blow to jobs and growth that California does not need, says the Wall Street Journal. 

Source: Cari Tuna, "Another California Dream," Wall Street Journal, April 5, 2010.


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