Report on costs of California's greenhouse gas law debated

06/30/2012 12:00 AM

06/29/2012 9:49 PM

Business and health groups sparred again this week over whether state-mandated greenhouse gas reductions will eliminate jobs and halt investment in the state, or create jobs, cut health care costs and fuel the economy.

The California Manufacturers and Technology Association released a report Thursday saying that California families would pay $2,500 annually and lose $900 in earnings per year by 2020 as a result of the state Global Warming Solutions Act. The act, also known as Assembly Bill 32, will also cause billions of dollars in losses to employers and the state economy, the report found.

AB 32, passed in 2006, requires the state to reduce greenhouse gas emissions to 1990 levels by 2020. It survived a ballot initiative to repeal the act two years ago.

Other business groups, along with health and environmental agencies, said the CMTA study was flawed and that AB 32 will not only create green jobs, but will save the state more than $4 billion in health care costs related to smog and air pollution.

The manufacturers' study, conducted by the economic research company Andrew Chang & Co. of Sacramento, concludes that by 2020, California will have 262,000 fewer jobs, 5.6 percent less gross state product and $7.4 billion less in annual local and state tax revenues as a result of the law.

These figures were based on an optimistic scenario, in which costs for each policy are assumed to be at the low end of a range of expected costs and the environmental goals are achieved, the study noted.

When less optimistic projections are used, families are saddled with $4,500 in annual costs and California would capture $38.8 billion less in local and state tax revenues by 2020, the report said.

"These policies will create a large but hidden tax on families and will add new burdens to a fragile state economy," said Jack Stewart, president of CMTA. "This new tax is not what we need while Californians struggle to find jobs, meet mortgage payments and maintain a reasonable quality of life."

David Clegern, a spokesman at the California Air Resources Board, said AB 32 promotes economic growth with reduced pollution, lower fuel spending and cleaner air.

He said one big flaw in the study is that it assumes companies will have to pay for the right to emit greenhouse gases under the state's new cap-and-trade system. In fact, he said, covered businesses will get 90 percent of their pollution allowances for free in the first year of the program.

Clegern said that public health benefits from cleaner air will save the state about $4.3 billion in health care costs in 2020 when AB 32 is implemented. Regulations requiring cleaner running cars will save Californians $5 billion in gasoline in 2025 and $10 billion on 2030.

Susan Frank, director of the California Business Alliance for a Green Economy, also refuted the study and the economic model it used.

Frank said California attracted $3.5 billion in clean-tech investment in 2011, representing 25 percent of the total venture capital investment in the nation.

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