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Supporters of AB 32 lowball true cost of global warming bill

By Roger Niello
Special to The Bee The Sacramento Bee
Published: Thursday, Apr. 1, 2010 - 12:00 am | Page 11A
Last Modified: Thursday, Apr. 1, 2010 - 9:15 am

On March 19, The Bee published an article ("CSUS dean, professor take heat for global warming study") that shed further doubt on research by two Sacramento State professors, Sanjay Varshney and Dennis Tootelian. The professors found that AB 32 (the Global Warming Solutions Act) would cost California more than a million jobs and billions of dollars over the course of its implementation.

In raising concerns about the costs of AB 32 on families and businesses, the professors joined a growing chorus of academics and experts who have said the California Air Resources Board's original economic analysis was faulty and should not have been accepted at face value.

The Legislative Analyst's Office was among these voices when it responded to my request for review of the AB 32 Scoping Plan back in 2008. The LAO criticized CARB's economic analysis for being inconsistent and incomplete. Some of CARB's own peer reviewers even noted that the agency's analysis seemed to be justifying a preconceived outcome rather than an unbiased evaluation of a piece of legislation. In 2008, the CARB economic analysis concluded – erroneously – that AB 32 will create more than 100,000 new jobs and increase revenues to the state.

And how have our state's regulators responded? Rather than acknowledging the significance of the Small Business Roundtable and the LAO report's findings, AB 32's promoters have trotted out a new strategy: Attack anyone who dares to question or challenge the proposed economic benefits of the program.

The problem with the attacks is that the facts keep validating the results of the Roundtable's study. For example, the Los Angeles Department of Water and Power recently proposed a rate increase of 28 percent to reduce its reliance on coal and fulfill the AB 32 goals. LADWP claims its electric rates could go up an additional 30 percent if CARB auctions 100 percent of pollution allowances as part of its cap and trade program. For many small companies and residents already teetering on the edge, such a rate increase would be disastrous.

Similar studies in Europe also validate the Roundtable study's results. Spain, one of the leading proponents of energy reduction and renewable energy programs, leads Europe with 17.5 percent unemployment. A 2009 study from King Juan Carlos University in Madrid shows that every "green job" created cost the Spanish economy 2.2 existing jobs.

German researchers echo the same concerns, essentially saying that studies that conclude that the number of green jobs created will fill the gap typically obscure or underestimate the offsetting impacts.

But as seen in The Bee's article, many have uniformly closed ranks against and attacked the Small Business Roundtable's study, perhaps because the results do not match their high hopes for AB 32. I predict that after reading this, AB 32 defenders will also attack the Spanish and German studies.

As we've recently seen with the national health care debate, great weight was placed on the Congressional Budget Office analysis of government policies. Unlike the numbers that AB 32 apologists promote, CBO found that the national plan to reduce greenhouse gas emissions (Lieberman-Warner) would cost American taxpayers $1.21 trillion ($156 billion for California) between 2009 and 2018 and would impose mandates on the private sector that would exceed $90 billion per year during the 2012-2016 period.

Even the U.S. Environmental Protection Agency concluded that this bill would result in annual reductions of U.S. gross domestic product from roughly $1 trillion to more than $2.8 trillion ($130 billion to $364 billion in California) in 2050.

The findings of Varshney and Tootelian are not out of line with what other studies have concluded about capping greenhouse emissions.

Unfortunately, CARB will not accept that one can question the effectiveness and costliness of AB 32 without questioning the occurrence of climate change, a scientific phenomenon. Anyone who questions the costs of AB 32 is considered a sellout, a crony, or just plain foolish.

Perhaps the most noteworthy result of the Small Business Roundtable's study is that even AB 32 apologists now concede that it will result in lost jobs and higher energy costs. What we're really arguing about at this point is how bad the pain will be.