Will California’s “Green” Policies Hurt or Help?

By Lucy Ma, Independent Voter Network California Capitol Correspondent

The Wall Street Journal recently published an article titled “Review & Outlook: The Price of Green Virtue”, which examines California’s penchant for all things green despite potential harm to its already struggling economy.

Primarily the article takes a closer look at the real world cost of AB 32, California’s comprehensive climate change law, on families and businesses within the state. The law which passed in 2006 aims to reduce the state’s greenhouse gas emissions to 1990 levels by the year 2020, with mandatory caps beginning in 2012.

Two independent studies are cited within the WSJ article, in which economic forecasts for the Golden State appear less than rosy.

According to the article:

The first study—sponsored by the California Manufacturers and Technology Association, whose members employ 1.2 million residents—estimates the price tag for three major new regulations associated with the law: cap-and-trade taxes on carbon emissions, a “low carbon fuel standard,” and a stringent 33% renewable mandate for electricity production. Together these policies raise energy costs and are expected to reduce state GDP by between 3.5% and 8.9% by 2020.

Even under the “optimistic” scenario, that’s a loss of up to $447 billion in California output over eight years and represents a bigger loss in income than the 2008-09 recession. The cost per California family is estimated at $2,500 a year due to higher costs. Repeat after Milton Friedman: There is no such thing as a free lunch.

One alarming conclusion is that “emissions reductions due to economic harm account for 26% of total reductions, more than any ARB mandated program” except cap and trade. This means that a major way Californians will reduce their greenhouse emissions is by slower growth, chasing industry out of the state, and putting more people out of work. If Californians produce less, their carbon footprint is smaller. The Sierra Club must be loving this weak recovery.

The second study commissioned by the Western States Petroleum Association focused on the low carbon fuel standard to be implemented under AB 32- requiring a 10% reduction in the total carbon intensity of transportation fuels by the year 2020. Compliance is certainly not an easy feat to achieve in this case considering alternative biofuels are not yet available in quantities needed for mass consumption- unless we count foreign imports.

According to the author, “Environmentalists dismiss these studies as biased, but they echo the government’s own recent studies. The only real argument is over the extent of the economic damage. Californians may believe this price is worth it, but they shouldn’t pretend they aren’t paying it”.

What are your thoughts on the matter- is going green worth the price?

The full article is available here: http://online.wsj.com/article/SB10001424052702304870304577491152903293004.html