NCPA - National Center for Policy Analysis

New Study on California Global Warming Law Indicates Higher Costs

July 23, 2012

AB 32, also known as the California Global Warming Solutions Act of 2006, propelled the state to the forefront in the fight against global warming. Successful passage of the law effectively turned the state into one of the most stringent regulators of greenhouse gas emissions in the nation and globally, charging the California Air Resources Board with implementing emissions-reducing initiatives, says the Independent Voter Network.

However, new cost analysis commissioned by the California Manufacturers and Technology Association (CMTA) suggests that the California Air Resources Board's 2010 projections understated the losses from the law's implementation. Using notably conservative estimates, the CMTA study finds that economic consequences will be substantial.

  • The study found that the average California family will end up paying an additional $2,500 annually by 2020 when AB 32 is fully implemented.
  • In addition, the state is expected to lose an additional 262,000 jobs and 5.6 percent of the gross state product.
  • Crucially, a state that is already in dire financial straits will, by the study's estimates, face a whopping $7.4 billion decrease in annual state and local tax revenues as a result of the law.

This new information comes at a time when the state's government is already struggling to maintain funding for some of its most basic services, and economic recovery remains anemic -- prompting calls for further consideration of the law.

Importantly, this new information also sheds light on the seemingly insuperable obstacles that will be faced by the state's small businesses, which will be disproportionately affected by the law's policies.

Source: Lucy Ma, "New Study on CA Global Warming Law Indicates Higher Costs," Independent Voter Network, July 4, 2012.  Andrew Chang, "California Can't Afford ARB's Global Warming Policies," Andrew Chang & Company, LLC, June 28, 2012.

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