CALIF CLIMATE LAW A STATE BENEFIT

Opinion: Getting the facts straight on California's energy policy
Editorial, May 8, 2010 (San Jose Mercury News)

[James Sweeney, Professor of Management Science and Engineering/ Director of the Precourt Energy Efficiency Center, Stanford University:] “California's Global Warming Solutions Act (AB 32) is due to take effect early next year…Critics claim AB 32 is inflexible and would seriously harm California's economy. The reality is quite different…A central element of AB 32 is an emission trading system similar to the cap-and-trade program for acid rain enacted in 1990 during President George H.W. Bush's administration…California sets the level of emission reductions but gives companies the flexibility to find low-cost ways to achieve reductions…[and] companies can trade emissions permits…Numerous studies show that this approach allows overall emissions-reduction goals to be achieved at significantly lower cost than under conventional command and control.

"AB 32 and other California climate efforts also include…a low-carbon fuel standard, a 33 percent renewable energy portfolio standard, utility-based energy efficiency programs, "smart growth" incentives for counties and cities, and automotive fuel efficiency standards. Critics claim these measures are costly…[but they are] likely to reduce costs of AB 32 compared with a policy that includes only cap-and-trade…[because such complimentary policies] address important market failures that cap-and-trade cannot."

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[James Sweeney, Professor of Management Science and Engineering/ Director of the Precourt Energy Efficiency Center, Stanford University:] "Critics claim AB 32 will harm California's economy…yet the [most pessimistic] impacts predicted are small…[and show that with] AB 32, California's economy will grow an average of 2.3 percent annually to 2020, compared with 2.4 percent annually in the absence of AB 32…[the] California Air Resources Board [CARB] shows smaller or approximately neutral impacts. University of California studies and a Brattle Group study show a neutral or minimal impact on the state's economy.

"…The assumption that California's economy is operating perfectly (except for the generation of greenhouse gas emissions) assures a conclusion that complementary policies have no useful role… In contrast, the CARB report assumes that market failures exist and therefore, cost-reductions through complementary policies are possible…[Either way, studies of AB 32] show only very small overall economic impacts…[and omit] possible gains from technical progress or new business formation associated with investment in green tech…"

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[James Sweeney, Professor of Management Science and Engineering/ Director of the Precourt Energy Efficiency Center, Stanford University:] "…California businesses that have curbed emissions [in anticipation of the implementation of AB 32] are factoring in costs of these improvements and seeing financial savings. Although California is experiencing hard economic times, the difficulties are the result of the global financial meltdown and subprime mortgage crisis, not AB 32.

"California's effort not only yields climate benefits, but also may trigger further benefits by providing a model that helps catalyze similar efforts in other states or at the federal level. It is reasonable for California to undertake these small costs, given the large climate change problem and the benefits from addressing emissions."