Who Pays? – Pacific Research Institute

Who Pays?

“When Gov. Arnold Schwarzenegger and lawmakers worked throughout 2006 to craft AB 32 – the state’s landmark legislation targeting the emissions that contribute to global warming – they repeatedly emphasized their intent to implement the new law with as little economic disruption as possible. Critics questioned how this would be possible, given that the law would force consumers and businesses to switch to cleaner but more costly energy sources. Against all logic, however, Schwarzenegger began to argue with increasing fervor that the law would actually help the economy.

Last fall, the governor’s fantasy was reinforced by the California Air Resources Board. The board issued an official economic impact study predicting the forced shift to costlier power would have few if any negative effects.

The study was savaged as unprofessional and unusable by independent economists hired to review it and was further discredited by the respected, nonpartisan Legislative Analyst’s Office.

In December, the air board adopted the study with barely a nod to its critics. But with the economy tanking, Republicans and African-American and Latino Democrats recently won full consideration of a bill by Sen. Bob Dutton, R-Rancho Cucamonga, that would force the air board to actually do a serious, honest study of AB 32’s economic costs.

On Wednesday, despite the support of panel Chairman Joe Simitian, D-Palo Alto, the bill was rejected by the Senate Environmental Quality Committee. Why did Democratic Sens. Ellen Corbett, Loni Hancock, Fran Pavley and Alan Lowenthal part ways with Simitian and GOP Sens. George Runner and Roy Ashburn? Reportedly, because of the lobbying of the air board, which said Dutton’s bill might delay implementation of AB 32. And implementing the law, you see, is what’s most important. Even if the law is deeply flawed. Even if it means going back on endlessly repeated promises about protecting jobs in our transition to a new era of energy regulation…”

The Senators might well have been better worried about achievement of the GOALs of the law rather than blind adherance to its implementation, ignoring real world events. Last year the national and state’s economy went down hill, and along with the reduced economic activity, our emissions of greenhouse gasses also dropped. According to the Energy Information administration (EIA) U.S. carbon dioxide emissions from fossil fuels decreased by 2.8 percent in 2008, from 5,967 million metric tons of carbondioxide (MMTCO2) in 2007 to 5,802 MMTCO2 in 2008, according to preliminary estimates released Wednesday by the Energy Information Administration (EIA). This is the largest annual decline in energy-related carbon dioxide emissions since EIA began annual reporting on greenhouse gas emissions. Factors that influenced the emissions decrease included record-high oil prices and a decline in economic activity in the second half of the year. Oil-related emissions declined by 6 percent, accounting for the bulk of overall reduction in energy related carbon dioxide emissions. With an even heavier economic downturn California, emissions here are likely to have dropped, percentage wise, even more than for the rest of the nation. So, for the time being and until the economy improves (with no help from laws like AB32) the emissions are actually dropping without the CARB regulations. This allows time to get the economic analysis and plan together and do it right. It would NOT have delayed achievement of the 2020 emission goals. In fact, if the economy continues in the doldrums, we’re likely to meet the emission goals years ahead of schedule, with no additional regulations. Rember the goal is to achieve 1990 levels of emissions, by the year 2020. According to the same EIA analysis, we are already (nationally) below 2002, here in 2009.

In addition, CARB admitted that they need to redo the economic analysis but refuses to acknowledge that the “Scoping Plan” needs to be revisited. They refuse even though the scoping plan is required by law to be based on sound economic analysis. Worse, even though the first analysis was worse than shoddy, guess who ends up paying for it? You guessed it–the taxpayers. If you hire a contractor to paint your house and the job is unacceptable, doesn’t the painter have to redo it at their expense? The CARB should be made to redo the analysis, do it right this time (with oversight by the Legislature) fix the plan-of-regulations predicated on that analysis, and pay for it out of their own budget: there should not be new appropriations to pay for something to be redone that could have, and should have, been done right the first time. More importantly, the costs incurred by CARB for doing the analysis–and doing it right– should not be included in the amount used to charge “fees” to businesses for implementing the plan. As it stands, the CARB has a perverse incentive to do the analysis wrong, and wrong again, because that will inflate their own budget (through collected fees) and expand their already far-reaching turf.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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