The Economic Impact of CA's AB32
As the regulatory process behind AB32 – California’s comprehensive climate change law passed in 2006 – gets into full swing, the actual economic impact that had so far only been predicted is now becoming clearer as experts are taking a closer look…and it’s not looking very good.
The Boston Consulting Group recently released a study, commissioned by BizFed member Western States Petroleum Association, finding that regulations flowing from AB 32 affecting transportation fuels (low carbon fuel standard, cap-and-trade) will result in the closure of several refineries in California, increase the price of gasoline by about $2.50 a gallon, and reduce the supply of fuels as early as 2015. They estimated regulatory-related job losses of 28,000 to 51,000, just in the refinery and related sectors.
The California Manufacturers and Technology Associationalso recently released a report finding that by 2020, California’s economic output will be more than five percent lower than had AB 32 not been implemented, and employment will be down by more than 200,000 jobs.
The Wall Street Journal also recently penned an editorial titled The Price of Green Virtue …..
“When California’s economy was booming in 2006—remember that?—Governor Arnold Schwarzenegger and many Californians wanted to show their environmental virtue by becoming the first state to pass a comprehensive climate change law. And so they did, for which the bill is starting to come due.
“Lawmakers and environmentalists predicted that the new law, called AB 32, would become a model for the rest of the nation. It never did. They also said the Golden State’s head start in developing green technologies would create thousands of new jobs. In 2008 the California Air Resources Board even estimated that the new rules and cap-and-trade tax would increase state GDP. In short, AB 32 was sold to the voters who declined to overturn it in a 2010 referendum as a green free lunch.
“Now fast forward to 2012. California’s economy is still struggling, the jobless rate is 10.8%, and AB 32′s taxes and regulations are starting to bite. Two new studies by private consulting firms add up the real-world cost to California families and businesses…..”
Read the full editorial here.