Calif. emissions law will cost jobs in short term, state analysts find

California policymakers used flawed economic models to justify a state effort to curb emissions of greenhouse gases, according to a new state report.

The California Legislative Analyst's Office found the state's 2006 climate law, A.B. 32, is unlikely to generate jobs in the short term and in fact would result in jobs lost -- contrary to claims from the law's promoters.

"We believe that the aggregate net jobs impact in the near term is likely to be negative," the report says. "Reasons for this include the various economic dislocations, behavioral adjustments, investment requirements, and certain other factors." Net job creation in the long term is too uncertain to predict, the report says.

The analysis was requested by state Sen. Dave Cogdill (R), who had questioned whether the state's goal of reducing greenhouse gas emissions to 1990 levels by 2020 would produce enough "green jobs" to offset predicted job losses in the fossil fuel sector and other industries.

"At a time when California's jobless rate is nearly three points higher than the national average, we should be doing everything we can to ensure any Californian who wants a job is able to get one," Cogdill said in a statement. Cogdill hails from Modesto, whose unemployment rate was 17.5 percent late last year.


A ballot initiative in November would suspend A.B. 32 until unemployment falls below 5.5 percent. A poll released this week by a group opposing the initiative found 47 percent of those surveyed saying they would not back the initiative and 37 percent expressing support (ClimateWire, March 10).

The initiative's backers -- petroleum refiners Valero Energy Corp. and Tesoro Corp. -- claim A.B. 32 would cost the state 1.1 million jobs. But the state report does not say what number of jobs would be lost.

State analysts say California's labor market would be affected by A.B. 32 through higher energy prices, reduced trade with other states, toughened vehicle fuel standards and the cost of complying with the law.

The California Air Resources Board's (ARB) own modeling may have underestimated the overall impact of climate regulations, the report says, by taking "snapshots" of the economy at different points in time, without considering the longer-term effects on businesses.

"The process of adjustment during the transition period can be difficult and impose significant changes and costs on households and businesses," the report says. "Even if a business might in theory end up being roughly the same off or even better off than it was originally at the end of the transition period, it may not make it to that point if the transition was too disruptive or financially difficult."

While an updated version of ARB's economic analysis is due out soon, no new data were used by the legislative analyst for its report. Economists criticized the original ARB analysis in 2008, saying it was far too specific in estimating a slight net increase in gross state product and individual earnings through 2020.

The legislative analyst's report drew a swift rebuke from the nonprofit Union of Concerned Scientists. The group called the report "baseless," citing other studies that have shown energy efficiency measures and renewable energy standards would create jobs.

"California has proven time and again that economic growth and environment protection go hand in hand," the group's economist, Jasmin Ansar, said.

Click here to read the LAO report.

Kahn reported from San Francisco.

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