California entrepreneurs have opened more clean-energy businesses, created more new jobs and collected more clean-technology venture capital funding than any other state since AB 32 passed in 2006. The clean-tech sector, which creates products and services to assist the shift toward low-carbon-based products and processes, is doing well. Though early-stage venture capital in this sector has ebbed, later-stage investments have increased in the last half-decade, according to Next10. California’s clean-tech investment portfolio also is increasingly diversified, a good portent for future growth.
At the same time, California’s overall economy is recovering well from the recession. Over the past 18 months, employment is up 3.6 percent, compared to a national average of 2.8 percent. The state’s pioneering climate law, AB 32, helps drive that productivity through driving the clean-tech market.
The economic good news will not change when transportation fuels come under the cap next year. That move will help diversify Californians’ choices for powering their vehicles. We also are driving farther on fewer gallons of gasoline than ever before, a trend that will continue due to policies such as AB 32. This means that consumers are spending less when fueling their vehicles.
The California Chamber of Commerce stated in an Oct. 5 Viewpoints commentary (“Carbon law poses risks to economy”) that AB 32 represents a shift in how California’s economy is structured. Indeed it is – and that shift is good.
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Instead of further reliance on petroleum, AB 32 moves us toward cleaner transportation choices, including biofuels from feedstocks that are a lot cleaner than oil. It incentivizes building more rooftop solar panels, jobs that can’t be exported elsewhere. It drives efficiencies for use of our buildings, our industries and our vehicles. AB 32 offers a choice: Do you want to grow cleanly, or do you want to grow in ways that are drastically more pollution-intensive? The Silicon Valley Leadership Group, a public policy trade association with more than 390 members, calls for the former.
The real question is if AB 32 should extend past 2020. It should, to provide further certainty and to continue to drive innovation and investment. Now is the proper time to do so, as many businesses make investments on three- to five-year time horizons. Such a move would continue California’s trajectory down a clean-energy, clean-tech growth path, which would be good for our state’s economy, California’s citizens and ultimately critical for California’s leading efforts to combat global climate change worldwide.
Tim McRae is the energy director for the Silicon Valley Leadership Group.