Air board panel's report on AB 32: Key points from initial review and more
March 24, 2010
By Chris Reed
UPDATE, 1:28 P.M.: There is a big disconnect between CARB's original press release and the L.A. Times' story on this and the documents they were allegedly based on. The report does not, repeat, does not predict economic growth as a result of AB 32. It is not rosey:
AB 32 is likely to raise fuel and energy prices, and these price increases will be reflected in higher prices of consumer goods.
UPDATE, 1:10 P.M.: I can't wait to see the appendices, which apparently will blow away Mary Nichols' happy talk on AB 32 being an unalloyed good. But a key focus from here on out needs to be the idea that the $20 billion or so that cap-and-trade generates annually starting in 2020 by charging emitters of greenhouse gases will be used in part as an all-purpose kitty to ameliorate the pain felt by certain groups and maybe companies.
It's the Social Justice Fund!!!! The potential for abuse is enormous.
Or will it just be transfered directly or indirectly to the state general fund? The report raises that possibility directly.
I don't doubt the sincerity of the economists who did the briefing, but they have enormous faith in the ability of the government to microregulate energy and then divvy up the spoils of this microregulation. Why have such faith?
UPDATE, 12:54 P.M.: AB 32 would kill one in seven California mining jobs (14%) and one in 12 (8.5) utility sector jobs, one of the briefers says. 9,000 jobs total.
UPDATE, 12:50 P.M.: Stanford Professor Lawrence Goulder strongly defends AB 32, but when I asked him if it makes sense for California to unilaterally impose cap-and-trade if the rest of the world doesn't follow suit with its own policies forcing a shift to costlier energy. "Then it would be hard to justify Californa action."
UPDATE, 12:34 P.M.: One of the peer reviewers of the original AB 32 "scoping plan" said it ignored the devastating impact that higher energy prices has on manufacturing. In the 87-page study, this issue is not even addressed. A search of the document finds two cursory references to "manufacturing," and not on the cost issue.
UPDATE, 12:25 P.M.: There's some honest data in this report. The initial L.A. Times story is extremely cursory. I'm now on a teleconference in which two of the report authors say it will have a negative effect on the economy.
ORIGINAL: Here's the key passage from the introduction to the Economic and Allocation Advisory Committee's new report saying AB 32 will not hurt the California economy:
However, the estimated impacts on state income from virtually all studies are small in relation to estimated costs to the California economy of unconstrained emissions growth. AB 32 produces substantial net benefits to California after taking into account the benefits to the environment and health. These environmental and health benefits provide the principal motivation for AB 32. Such benefits are not included in the cost calculations of many economic models.
In other words, the whole report is BUILT ON THE PRESUMPTION THAT AB 32 SOLVES GLOBAL WARMING!!!!! That it SOLVES "UNCONSTRAINED EMISSIONS GROWTH"!!!
How farcical can you get. Unless there is a global effort to reduce greenhouse gases, the actions of one state in one nation won't change the big picture of greenhouse gas build-up in the atmosphere. If one state in one nation decides to unilaterally force a switch to much costlier but cleaner energy, the key effect will be to put it at an competitive economic disadvantage with rival states and nations.
I was wondering what the report would say -- whether it would be honest, or, if it were rigged, how would the rigging occur. Here's how it was rigged: by pretending AB 32 would solve the problems California faces from ."unconstrained emissions growth."
What an unbelievable farce.
Time to once again invoke U.S. Energy Secretary Steven Chu. Last March, Chu was asked to comment at a congressional hearing on the possibility the U.S. government will impose tariffs on nations that don't move to reduce the emissions that contribute to global warming.
Chu didn't call for tariffs as a means to encourage other nations to see the light on climate change. He called for them because a U.S. move to cleaner but costlier forms of energy would jeopardize U.S. business interests if it is largely unilateral: "If other countries don't impose a cost on carbon, then we will be at a disadvantage," Chu told the congressional committee.
This is also the view of Robert Stavins, the world's leading expert on environmental economics.
Stavins, the Harvard prof who was chairman of the federal EPA's economic advisory committee under Bill Clinton, believes something must be done to fight global warming. But he trashed the "scoping plan" for AB 32 for pretending there would not be an economic downside:
The California Air Resources Board (CARB) merits credit for having provided an economic analysis of its "Draft Scoping Plan" for achieving AB 32's targets, but for the reasons I describe in this brief memo, I have come to the inescapable conclusion that the economic analysis is terribly deficient in critical ways and should not be used by the State government or the public for the purpose of assessing the likely costs of CARB's plans. I say this with some sadness, because I was hopeful that CARB would produce sensible policy proposals analyzed with sound scientific and economic analysis.
Do you know who one of the allegedly impartial expects on the Economic and Allocation Advisory Committee is?
Former state Sen. Joe Nation -- ONE OF AB 32'S ORIGINAL LEAD AUTHORS!
I can't wait to pose specific questions to some of the people on the panel. I'll have more.
