Reply to AB 32 Comments

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I’m listening to reader comments on my original blog story.

I do agree that policymakers have to be concerned about dislocation and sectoral job losses and not just net job losses or gains. While AB 32 and other climate change and energy laws undoubtedly present opportunities and risks, it is not a given that there have to be "winners" and “losers". Even smokestack type industries that are squarely in the sights of emissions reductions laws have an opportunity to innovate, to retool, and to introduce new technologies. One factor that applies to industries producing commodities (cement, oil, gas, glass, chemicals, etc.) is that they require a local presence to be economic, e.g. cement and building materials are produced locally because it does not make sense to ship it across the globe or even the country. These sorts of jobs cannot be easily exported to China or elsewhere, so there is a real opportunity to fashion economically viable, low-carbon alternatives to the present mode of operation. I am not an economist (I only play one on TV as they say!), so I would refer you to one of the studies that describes the modeling in some detail. The studies may be right or wrong and only time will tell, but the State and the nation need the resolve to test the models and forge ahead with building a low-carbon economy.

I like the idea of additional incentives to stimulate the development of clean energy supplies. If you mean to imply that AB 32 is a penalty oriented scheme, I do not think that is the case. The piece of AB 32 that has so many politicians crying wolf is the market-based approach to capping and trading carbon emissions. The scheme is not fully designed nor is it in place yet, so again I believe the predictions of impending economic doom are misplaced. Let the ARB (California Air Resources Board) complete its work and then let the market do its work (in a well designed and controlled fashion and not in emulation of Wall Street) and then we will have a real basis to draw some conclusions about its efficacy.

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Comments

Global Crisis? Hmm? You mean climate gate?

Submitted by BrianM on Wed, 03/10/2010 - 18:33.

The president of the USA does not even know that the satellite he claimed while on TV is monitoring CO2 production from cities and companies on the ground blew up as it was launching and has yet to be relaunched. The IPCC depended on magazine articles to claim the disappearance of Himalayan glaciers. The Brit whose data the IPCC relied on as the core basis for their out-of-context claims on warming cannot even find his data and has admitted that he is terrible at taking data. Of the 1200 or so earth-bound temperature monitors that were relied on, at least 700 were investigated and found to be corrupt and not meeting the specifications to actually have reliably taken data from a normalized point since data had begun to be gathered, negating all of the data they had ever taken. Need I say more? Oh let me go on. No storm data is worse now than before based on warming having happened or not. Zero correlation exists between the 1850s rise of industrialization and any warming that was claimed (logical since none of the data and or equipment was valid) ... yes ... great science. The only thing that can be said with certainty is that since 10,000 years ago coming out of the mini ice age... the temperature has risen. Part of the green revolution across the Earth where higher crop yields have fed people may be due to warming. And the temp may go down again ... or maybe we will hit the temps that allowed the Romans to grow wine in England 500AD. We should proceed with logical strategic investment in energy and never, never mention climate change or global warming again!

"Climate gate"

Submitted by LKP on Fri, 03/12/2010 - 19:14.

Sure, Brian. And maybe we will also find out that the earth is really flat and the stars all revolve around it.

There are always "losers" but ...

Submitted by Justin Hough on Thu, 03/11/2010 - 14:14.

I agree that this is a short sighted way of looking at things. I don't mean to imply AB 32 is meant to penalize anyone. My broader point is that no matter how you slice it, there will be those who benefit and there will be those who are negatively impacted in the relative short term by legislation like AB 32.

As to the specifics of AB 32, I have not read it and have only had time to listen to news blurbs on it, which of course I take with a large tablespoon of salt. I'm just skeptical that there will be a short term economical benefit (i.e. better paying jobs for Americans) if something like AB 32 passes. In the long run? Let's wait and see. But I don't think we can go wrong going to cleaner energy alternatives AND reducing our reliance on importing energy.

Thanks for the link to the economic analysis! Haven't read it in its entirety yet.

Interesting assessment

Submitted by BrianM on Wed, 03/10/2010 - 12:02.

Energy is used locally but is sourced around the world from a massive "pool." We move massive amounts of oil around the world and we built massive tankers to do so economically. As well, cement in this country is mixed locally but Cemex is one of if not the largest supplier of Portland cement. They move it across oceans via massive barges just like oil. Just add water, stone, etc. later at site where used.

When you penalize the user which is what cap and trade does, you have taken the least efficient path to prohibit a behavior and not funded the path of technology innovation. Those taxes just got passed to the consumer.

We are not a country with massive mass transit that can allow behavior changes required by individuals to avoid such a tax. Incentives work better. If the taxes that oil companies pay were forgiven if directed at alternate energy, we would spend 100% of that money on the technology and or products that would get us to our goals of 20 or 25% by 2025.

Best you could expect from a carbon tax or cap and trade is that the government would hire more overpaid employees and misdirect the funds, just like the fed did with $54B of funds that were taxed from nuclear power companies to take care of nuclear waste ... most of which has been encapsulated in place and is being paid for by local governments.

We should partner with the "big dogs" ... oil companies ... their taxes directed at wind and solar would create a massive boom in alternate energies and jobs without instantly destroying others. Yes, I know it's not perhaps politically astute to say lest make oil companies tax free if they were to do what I have outlined, but it's economically smart and common sense. But, you know what they say about common sense! The only other way to get there is that alternate energies need to be as cheap as oil/gas/coal to implement and use whether it's "peak" use or other wise.

Thanks for your comment

Submitted by Bruce Klafter on Wed, 03/10/2010 - 17:19.

Thanks for your comment. The debate over the potential effects of AB 32 generally and the cap and trade mechanism will continue until its implementation begins and we have some real experience with it. Just yesterday, the California Legislative Analyst's Office (LAO) released a critique of the Air Resources Board (ARB)'s economic modeling. The LAO suggests the economic analysis may have made some unreasonable assumptions and goes on to point out that key policy and technical decisions are yet to be made and further hearings on cap and trade will take place in November of this year. The ARB is subjecting the economic analysis to peer review right now and additional reports are due out later as well. I certainly would acknowledge that the U.S. and California lack the infrastructure (e.g. extensive mass transit) to encourage all of the most sensible environmental and economic choices. AB 32 is aiming at reductions of transportation-related emissions by means of a low-carbon fuel standard, i.e. if we must use automobiles in this state, let's reduce their contribution to greenhouse gases. At the heart of cap and trade proposals is the notion that emitters (or polluters if you prefer) should bear the burden of reducing and/or offsetting their emissions. I remain hopeful that we can design a system that encourages the right changes in their operations while not imposing additional burdens on consumers. I do not believe we have an either/or choice between AB 32 and stimulus of renewable energy development; the physical changes we are experiencing from climate change demands both approaches. It is truly a global crisis, but we can only progress with local action.