Wednesday, October 5, 2016

[TransportNews] Ethan Elkind: Notes Of Caution For Californians Celebrating The Economic Benefits Of Climate Change Laws

One of the keys to passing SB 32 (Pavley), the landmark 2030 climate change legislation the legislature approved this year, is that the California economy has thrived since AB 32 (Nunez) passed in 2006.  As many climate advocates have noted, despite lowering emissions on a per capita and aggregate level for over a decade, California’s economy is growing at one of the fastest clips in the nation.

All of this economic activity happened despite numerous regulatory and statutory programs to rein in carbon emissions, including cap-and-trade, renewable energy mandates, energy efficiency standards, and the low-carbon fuel standard.  And the state is on pace to meet the AB 32 2020 goals, which requires a return to 1990 levels of emissions (about a 15% reduction from business as usual).

In short, this progress has deflated the typical conservative objections to environmental regulations, that they will be economy crushers and job killers.  Here’s a summary of the good news, as Debra Kahn reports in ClimateWire (pay-walled):
Meanwhile, California’s economy since 2006 has jumped from the eighth- to the sixth-largest in the world. Yet the amount of greenhouse gas emissions it produces per person, as well as per dollar of gross domestic product, have fallen. Since 2001, state agencies have reported, its carbon emissions per unit of GDP have fallen 28 percent. Last year, the state was home to 68 percent of all clean technology investment nationwide and led in clean-tech patent registrations, as well, according to environmental advocacy group Next 10. And from 2007 to 2015, California outstripped the United States as a whole in job growth and personal income, according to an analysis released in June by Chapman University.
But the celebration shouldn’t get too loud, at least not yet.  It’s clear that the state has benefited from some unusual trends that has made it both easier to meet the emissions goals and to grow the economy in a carbon-lite way.  First, the economic recession in 2009 put a significant damper on emissions with a slower economy:
“California had a pretty soft economy for many years after its goal was set,” said Severin Borenstein, an economics professor at UC Berkeley and a member of a committee that the California Air Resources Board (ARB) set up in 2012-13 to advise it on the design of its cap-and-trade market. “Although it’s heating up now, we will easily make the 2020 goal, and that will in large part be due to the weak economy for many years.”
Second, the state’s economy has grown in emission-lite industries:
Since 2009, California has lost 1 percent of its manufacturing jobs, compared to 3.7 percent growth in the United States as a whole. During the same period, California’s information services sector grew 10.9 percent, compared to a 1.4 percent decline nationwide, according to Chapman’s June analysis.
We’ve essentially pushed many energy-intensive industries out of state, while benefiting from a boom in services industry like tech, which has made it much easier to meet these carbon-reduction goals.

To be sure, I would also credit the thoughtful, measured approach of many of California’s climate programs and regulations.  And of course we have to credit the innovation in the private sector, bringing down the costs of solar PV and batteries and scaling up electric vehicles and low-carbon biofuels, among others.

But as we head into a post-SB 32 world of 40 percent reductions by 2030, the state may not be so lucky with these larger economic trends going forward.  It doesn’t mean we should change the approach, but it means we should be honest about what it takes to decarbonize an entire economy and do everything we can to continue bringing down the costs of the technologies that will help us achieve those goals.

Part of the point of AB 32 was to begin the process of “bending the curve” on emissions and clean tech costs.  We’re seeing that happen.  But to continue on this path through 2030 without costing the economy significantly (and thereby undermining public support), we’ll need further price declines and massive gains in energy efficiency.  It’s all doable, but it still remains an open question as to how much and how soon.

Until then, we may need to inject some notes of caution into an otherwise positive picture, so far.


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