BILL ANALYSIS
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Date of Hearing: July 7, 2009
ASSEMBLY COMMITTEE ON JOBS, ECONOMIC DEVELOPMENT AND THE ECONOMY
V. Manuel Perez, Chair
ACR 77 (Swanson) - As Introduced: May 28, 2009
SUBJECT : California Global Warming Solutions Act of 2006
SUMMARY : Calls on the Air Resources Board (ARB) to include a
sector-based workforce impact assessment and mitigation plan
within its analysis of the AB 32 Scoping Plan and related
rulemaking.
1)Calls on the ARB to meet statutory requirements of the
California Global Warming Solutions Act of 2006 (GWSA) for the
preparation of the best available economic analysis by
ensuring that the analysis of the emission reduction measures
proposed in the Scoping Plan and related rulemaking include
the following:
a) An analysis of the projected employment impacts of the
proposed measure by industry sector in each of the years
leading up to 2020, and beyond, that specifies, in
particular, the potential for green collar jobs to be
located in or outside California;
b) Identification of the types of jobs that will be created
in California, the industry sectors for which the jobs will
be created, and the wage and benefit levels expected for
those jobs;
c) Identification of the types of jobs, including industry
sectors, that may be lost in California; and
d) A plan for providing California workers a training
program for new green technology jobs that are different
from the traditional jobs in energy, transportation, and
construction.
2)In addition, the resolution makes a numbers of findings and
declarations including, but not limited to:
a) Retaining and creating good jobs with middle-class wages
and benefits should be an essential element of the GWSA;
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b) The draft scoping plan prepared in connection with the
GWSA acknowledges that certain job sectors will experience
a reduction in workforce and, therefore, will create
hardship for the workers currently employed in those
industries;
c) The implementation of the act may likely increase
California's demand for new, advanced, and green
technologies, but California may not necessarily enjoy any
comparative advantage in the production of those
technologies; and
d) Current economic conditions require extreme caution in
implementing new regulations that may further hamper job
creation and the state's economic recovery.
EXISTING LAW:
1)Requires the ARB to adopt a statewide greenhouse gas emissions
(GHG) limit equivalent to 1990 levels by 2020 and adopt
regulations to achieve maximum technologically feasible and
cost-effective GHG emission reductions.
2)Requires ARB to adopt a "Scoping Plan" for AB 32
implementation by January 1, 2009, including an evaluation of
the total potential costs and total potential economic and
non-economic benefits to California's economy, environment,
and public health, using the best available economic models,
emission estimation techniques, and other scientific methods.
3)Requires ARB, when adopting AB 32 regulations, to rely upon
the best available economic and scientific information and its
assessment of existing and projected technological
capabilities.
4)Authorizes the Governor, in the event of extraordinary
circumstances, catastrophic events, or threat of significant
economic harm, to adjust the applicable AB 32 deadlines for
individual regulations, or for the state in the aggregate, to
the earliest feasible date after that deadline.
FISCAL EFFECT : Unknown
COMMENTS :
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1)Purpose of the resolution : According to the author, AB 32 was
a landmark piece of legislation that set the bar high for
reducing GHG emissions in California. However, without
appropriate implementation, AB 32 could eliminate economic
opportunities for some, in the course of providing
opportunities to others.
According to a UC Berkeley Center for Labor Research report,
more industry-specific and occupational research is greatly
needed to assess the workforce needs of the State's emerging
green economy. In addition, a report by the Legislative
Analyst's Office (LAO) states that the ARB's economic analysis
has weaknesses that need to be addressed. In order to direct
resources to the proper areas, such as training, retraining,
and education programs that will provide workers with the
skill sets necessary to work in the jobs created by a new
green economy, an accurate analysis is crucial for
policymakers.
The author states that ACR 77 is not meant to undermine the
provisions of AB 32; it was introduced to develop a win-win
scenario. The resolution simply encourages ARB to conduct a
more comprehensive analysis of the impact that AB 32 will have
on jobs in the State, to ensure that California is maintaining
employment opportunities and preparing the workforce for the
emerging green economy.
2)AB 32, climate change and GHG emissions : GHGs contribute
significantly to climate change and are a key sustainable
development challenge to California's ability to meet its
environmental, economic, and quality of life objectives.
Among the consequences of climate change are rising
sea-levels, changes in precipitation patterns, and an
increased risk of droughts and floods. These changes threaten
biodiversity, existing human economic development patterns,
and public health.
Carbon dioxide, a byproduct of fossil fuel combustion, is the
principal greenhouse gas (84%) contributing to global warming.
However, other GHGs include methane (8%), nitrous oxide (6%),
and what have been called the "synthetic gases" (2%),
(hydruoflorocarbons, perfluorocarbons, and sulfur
hexafluoride), are also important contributors to climate
change. There is general global consensus that the
significantly increased levels of these pollutants are
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primarily the result of human activities including activities
associated with transportation, manufacturing, and energy
generation.
Historically, the U.S. is considered the single largest
contributor of carbon dioxide emissions, contributing 29.3% of
worldwide emissions between 1850-2002. Since 2006, however,
China with 6017 million metric tons of carbon dioxide
(MMTCO2E) emissions is generally considered to be the largest
global emitter with the U.S., at 5902 MMTCO2E, keeping a close
second. Russia's 1704 MMTCO2E is ranked as the third largest
emitter.
California is estimated by ARB to be the 15th largest GHG
emitter in the world and the largest U.S. state contributor,
emitting about 2% of global GHG emissions. Emissions in
California between 2002-2004 break down by industry as
follows:
Transportation, 38%
Electricity, 23%
Industry, 20%
Recycling and Waste, 1%
High Global Warming Potential Gases, 3%
Agriculture, 6%
Commercial and Residential, 9%
California, like states across the country, faces many
challenges in adapting to climate change. Risks associated
with climate change differ broadly by industry, region, and
target markets, among other things. For illustration, the
following is a partial list of the impacts climate change is
expected to have in California and how these impacts may
affect companies doing business in the state.
a) Reduced snow pack is likely to reduce spring snowmelt
and result in more winter runoff, which could effect access
to water throughout the state.
b) Less snowmelt runoff would mean lower early summer
storage at major foothill reservoirs with less
hydroelectric power production. The added winter runoff is
generally not storable because of flood control needs. The
loss of electricity could affect the price and even the
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availability of electricity in certain areas of the state.
c) Lower summer reservoir levels would adversely affect
recreation and tourism which could affect employment within
the foothills, as well as manufacturing and retail of
products associated with these activities.
d) Sea level rise would affect the Sacramento/San Joaquin
Delta worsening existing levee problems and causing more
saltwater intrusion. This could affect the availability
and cost of clean water, which is necessary for a variety
of manufacturing purposes.
e) Climate change in California will also likely result in
a higher frequency of large damaging fires. Beyond the
direct impact of the fires, the cost and availability of
insurance will likely be impacted. Taxes may be increased
to cover the cost of fighting the fires and redeveloping
areas damaged by the fires.
Governments have a variety of tools to address these risks and
help people and businesses adapt to climate change. Key
public policy tools could include, but are not limited to,
regulations such as those required in AB 32; disclosure
standards; tax rates, credits and deductions; local
development incentives; depreciation schedules; grants, loans,
guarantees, and rebates; construction and design standards;
professional licensing standards; connection authority to
public facilities; and, government purchasing power.
Given the broad breadth of tools available to government and
the importance of maintaining as healthy an economy as
possible during the economic transition to a lower
carbon-based economy, it will be important that each emission
reduction action be carefully evaluated to ensure that the
least economically harmful choices are made to reach the state
GHG reduction targets.
1)The Scoping Plan : Existing law requires the ARB to approve
and implement a framework for California to reduce GHG
emissions to 1990 levels by 2020 and to reach 80% of 1990 GHG
emission levels by 2050. In December 2008, the ARB approved
the Scoping Plan to begin this work.
ACR 77 asks for further analysis to be considered within the
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Scoping Plan, particularly in the area of its impact on
workforce and the related training needs that may occur in
implementing the programs, fees, and regulations identified in
the Scoping Plan. Below is a general summary of the Scoping
Plan including a chart of the proposed emission reduction
actions.
---------------------------------------------------------------
| Recommended Greenhouse Gas Reduction Measures | 2020 |
| |Reductions|
| | |
| |(MMTCO2E) |
|----------------------------------------------------+----------|
|Estimated Reductions from the combination of the | 146.7 |
|Cap-and-Trade Program and complementary measures | total |
|including the 12 items below. | |
| | |
|----------------------------------------------------+----------|
|1. California Light-Duty Vehicle GHG Standards | 31.7 |
|(Transportation Sector) | |
| Implement Pavley standards | |
| Develop Pavley II light-duty vehicle | |
| standards | |
| | |
|----------------------------------------------------+----------|
|2. Energy Efficiency (Electricity & Commercial and | 26.3 |
|Residential Sectors) | |
| Building and appliance energy efficiency | |
| and conservation | |
| Increase Combined Heat and Power (CHP) | |
| electricity production by 30,000 GWh | |
| Solar Water Heating (AB 1470 goal) | |
|----------------------------------------------------+----------|
|3. Renewables Portfolio Standard (33% by 2020) | 21.3 |
|(Electricity Sector) | |
|----------------------------------------------------+----------|
|4. Low Carbon Fuel Standard (Transportation | 15 |
|Sector) | |
|----------------------------------------------------+----------|
|5. Regional Transportation-Related GHG Targets | 5 |
|----------------------------------------------------+----------|
|6. Vehicle Efficiency Measures (Transportation | 4.5 |
|Sector) | |
|----------------------------------------------------+----------|
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|7. Goods Movement (Transportation Sector) | 3.7 |
| Ship Electrification at Ports | |
| System-Wide Efficiency Improvements | |
|----------------------------------------------------+----------|
|8. Million Solar Roofs (Existing Program Target) | 2.1 |
|(Electricity Sector) | |
|----------------------------------------------------+----------|
|9. Heavy/Medium Duty Vehicles (Transportation | 1.4 |
|Sector) | |
| Heavy-Duty Vehicle GHG Emission Reduction | |
| (Aerodynamic Efficiency) | |
| Medium- and Heavy-Duty Vehicle | |
| Hybridization | |
|----------------------------------------------------+----------|
|10. High Speed Rail (Transportation Sector) | 1.0 |
|----------------------------------------------------+----------|
|11. Industrial Measurer for sources covered under | 0.3 |
|the cap-and-trade program including refineries and | |
|energy efficiency and co-benefits audits (various | |
|industry sectors) | |
|----------------------------------------------------+----------|
|12. Additional reductions necessary to achieve the | 34.4 |
|cap | |
|----------------------------------------------------+----------|
| | |
|----------------------------------------------------+----------|
| Estimated Reductions from Uncapped Sources as | 27.3 |
| indicated in 1 to 4 below | total |
|----------------------------------------------------+----------|
|1. High Global Warming Potential Gas Measures | 20.2 |
|(various sectors) | |
| Reduction of Use, Recapture and Recovery | |
|----------------------------------------------------+----------|
|2. Sustainable Forests (Forestry Sector) | 5.0 |
|----------------------------------------------------+----------|
|3. Industrial Sectors not covered under the | 1.1 |
|cap-and-trade program including oil and gas | |
|extraction and transmission | |
|----------------------------------------------------+----------|
|4. Recycling & Waste including landfill methane | 1.0 |
|capture (Recycling and Waste Sector) | |
|----------------------------------------------------+----------|
|Total Reductions Counted Toward 2020 Targets |174 total |
|----------------------------------------------------+----------|
| | |
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|----------------------------------------------------+----------|
|Other Recommended Measures items 1 to 6 below | 2020 |
| |Reductions|
| | |
| |(MMTCO2E) |
|----------------------------------------------------+----------|
|1. State Government Operations | 1-2 |
|----------------------------------------------------+----------|
|2. Local Government Actions and Regional GHG | TBD |
|Target | |
|----------------------------------------------------+----------|
|3. Green Buildings | 26 |
|----------------------------------------------------+----------|
|4. Recycling and Waste including mandatory | 9 |
|commercial recycling | |
|----------------------------------------------------+----------|
|5. Water Sector Measures | 4.8 |
|----------------------------------------------------+----------|
|6. Methane Capture at Large Dairies (Agriculture | 1 |
|Sector) | |
---------------------------------------------------------------
---------------------------------------------------------------
|Source: AB 32 Scoping Plan, CARB, |
|2008 |
| |
---------------------------------------------------------------
As the chart indicates, one of the most significant components
of the Scoping Plan is a cap-and-trade program covering 85%
(147.7 MMT) of the state's carbon dioxide emissions. This
program will be developed in conjunction with the Western
Climate Initiative, comprised of seven states and four
Canadian provinces that have committed to cap their emissions
and create a regional carbon market.
Additional key recommendations of the Scoping Plan include
specific actions to enhance and expand energy efficiency
programs; implement cleaner car operation standards; increase
the renewable portfolio standard; and, implement a low-carbon
fuel standard. The Scoping Plan proposes full deployment of
the California Solar Initiative, high-speed rail,
water-related energy efficiency measures and a range of
regulations to reduce emissions from trucks and from ships
docked in California ports. There are also measures designed
to reduce or recover a range of very potent GHGs, called
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including refrigerants and other industrial gases, which are
known to contribute to global warming at levels many times
greater than CO2.
In implementing this Scoping Plan, ARB forecast a net gain of
$33 billion in economic activity resulting in $7 billion in
additional GSP. In addition, ARB states that many of the
measures in the plan will deliver significant gains in energy
efficiency. ARB believes that even with the projected
increases in per unit energy costs, that implementation of the
actions in the Scoping Plan will result in annual savings per
household of between $400 and $500 on average by 2020.
Similar savings are projected in the transportation area. It
is further stated that the state's proactive climate change
policy will create a strong incentive for additional private
investment.
The Scoping Plan also recommends, and the ARB is currently in
the process of adopting, fees to fund the state's
implementation and administration of AB 32. Existing law
specifies that these fees can be assessed on the sources of
GHG emissions which include, but are not limited to:
producers and importers of transportation fuels, refineries,
cement manufacturers importers of out-of-state electricity,
facilities that combust coal, and natural gas utilities and
pipeline owners and operators.
AB 32 implementation costs are estimated by the ARB to be $24
million in 2007-08; $32 million in 2008-09; and $39 million in
2009-10 for a total program start-up cost of $95 million
through June 30, 2010. ARB's proposed AB 32 budget for FY
2009-10 includes funding for 177 personnel years for a variety
of boards and departments, 155 of which are located at ARB.
ARB estimates that administration, implementation, and
enforcement of the proposed emission reduction strategy, as
outlined in the Scoping Plan, will require a continuing source
of funding of approximately $55 million per year.
Most of the measures in this Scoping Plan will be implemented
through the full rulemaking processes at ARB or other
agencies. Conceivably, the public and key stakeholders will
have an opportunity to further engage as individual measures
are developed and analyzed in more detail. ARB believes that
this additional analysis and public input will help to provide
greater certainty about the estimates of costs and expected
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GHG emission reductions.
With the exception of Discrete Early Actions, which will be in
place by January 1, 2010, other regulations are expected to be
adopted by January 1, 2011 and take effect at the beginning of
2012. This means more than 20 additional Scoping Plan
measures will be adopted by ARB in 2009 and 2010.
4 Economic Analysis Models : In evaluating the economic impact
of the Scoping Plan, ARB compared estimated economic activity
under a business-as usual (BAU) case to the results obtained
when actions recommended in the Scoping Plan are implemented.
Under the BAU case, GSP in California is projected to increase
from $1.8 trillion in 2007 to almost $2.6 trillion in 2020.
The results of ARB's analysis indicate that implementation of
the Scoping Plan will have an overall positive net economic
benefit for the state primarily because of the substantial
energy savings, which "should more than pay back the cost of
the investments at expected future energy prices." More
specifically, ARB states that the projected economic benefits
in 2020 compared to the BAU are as follows:
$33 billion in increased economic production;
$7 billion in increased overall gross stare product;
$16 billion in increased overall personal income;
$200 in increased per capita income; and,
More than an additional 100,000 jobs.
In undertaking its economic analysis, ARB used two
macroeconomic models, the E-DRAM and the BEAR models to
forecast overall economic output and employment based on the
same underlying data and estimates of the costs of specific
policy measures. The E-DRAM and BEAR models can provide a
detailed picture of the California economy that includes 120
distinct industrial sectors. Based on this modeling, it is
estimated that the California economy can absorb the costs of
lowering GHG emissions to the AB 32 levels without reducing
employment. The table below shows employment, by industry
sector, that is estimated to be impacted by the implementation
of the Scoping Plan, based on E-DRAM modeling.
-----------------------------------------------------------
|Table 27 from Scoping Plan: Summary of Employment Changes |
| by Sector from Modeling and Scoping Plan Using E-DRAM |
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-----------------------------------------------------------
|---------------+---------+---------+----------+-----------|
| |Employmen|(thousand| | |
| | t |s) | | |
|---------------+---------+---------+----------+-----------|
|Sector | 2007 |Business-| Scoping |Percent |
| | | as- | Plan |Change |
| | | usual | |from BAU |
|---------------+---------+---------+----------+-----------|
|Agriculture, | 398 | 449 | 464 | 3.5% |
|Forestry and | | | | |
|Fishing | | | | |
|---------------+---------+---------+----------+-----------|
|Mining | 26 | 26 | 26 | 1.3% |
|---------------+---------+---------+----------+-----------|
|Utilities | 60 | 67 | 57 | -14.7% |
|---------------+---------+---------+----------+-----------|
|Construction | 825 | 929 | 934 | 0.5% |
|---------------+---------+---------+----------+-----------|
|Manufacturing | 1,821 | 2,046 | 2,057 | 0.5% |
|---------------+---------+---------+----------+-----------|
|Wholesale | 703 | 791 | 793 | 0.1% |
|Trade | | | | |
|---------------+---------+---------+----------+-----------|
|Retail Trade | 1,688 | 1,901 | 1,916 | 0.8% |
|---------------+---------+---------+----------+-----------|
|Transportation | 447 | 503 | 510 | 1.2% |
|and | | | | |
|Warehousing | | | | |
|---------------+---------+---------+----------+-----------|
|Information | 398 | 448 | 450 | 0.4% |
|---------------+---------+---------+----------+-----------|
|Finance, | 911 | 1,026 | 1,046 | 2.0% |
|Insurance and | | | | |
|Real Estate | | | | |
|---------------+---------+---------+----------+-----------|
|Services | 5,975 | 6,729 | 6,773 | 0.7% |
|---------------+---------+---------+----------+-----------|
|Government | 3,100 | 3,491 | 3,502 | 0.3% |
|---------------+---------+---------+----------+-----------|
|Total | 16,352 | 18,405 | 18,528 | 0.6% |
----------------------------------------------------------
-----------------------------------------------------------
| Source: Air Resources Board, December 2008 AB 32 Scoping |
|Plan |
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| |
-----------------------------------------------------------
ACR 77 calls for additional work on the workforce impacts of
actions recommended in the Scoping Plan and in the development
of related regulations. As illustrated in the chart above,
the proposed actions in the Scoping Plan are expected to have
a significant impact on workers in the utilities area.
Historically these jobs have represented quality jobs, paying
above average wage rates including benefits. Concerns have
arisen that implementation AB 32 will not only eliminate these
jobs, but also other high wage jobs in the manufacturing
sector.
Further, there is a concern that the Scoping Plan provides
only a limited understanding of how California's economy will
transition from its current economic status to the 2020
economy envisioned in the Scoping Plan. To address this
issue ACR 77 also calls for the Scoping Plan to more clearly
identify potential jobs lost and those that will be created,
including the wage rates and benefit levels. Given the
importance of a successful economic transition, implementation
of the recommendation in ACR 77 will provide greater
transparency and an opportunity for better planning and
assistance to impacted workers and the businesses in which
they currently work.
5)California Economy : California is one of the ten largest
economies in the world with a 2008 gross state product of
$1.84 trillion. May 2009 unemployment was at 11.5%
(seasonally adjusted) representing an estimated 2.1 million
unemployed workers in California. Below is a selection of
county unemployment rates for May 2009.
Alameda County:10.7% (Up from 5.6% in 2008)
Colusa County: 17.8% (Up from 10.6% in 2008)
Contra Costa: 10% (Up from 5.6% in 2008)
Fresno County: 15.4% (Up from 9.4.% 2008)
Imperial County: 26.8% (Up from 20.8% in 2008)
Los Angeles County: 11.4% (Up from 6.8% in 2008)
Riverside County: 13.1% (Up from 7.5% in 2008)
Sacramento County: 11.1% (Up from 6.4% in 2008)
Santa Clara County: 11.1% (Up from 5.4% in 2008)
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These unemployment figures represent job losses in every
sector, excluding the education and health services sector.
Jobs losses for May 2009 ranked in order are as follows:
government (14,200); construction (11,300); professional and
business services (10,900); manufacturing (9,600); trade,
transportation, and utilities (8,300); information (8,100)
financial activities (3,500); leisure and hospitality (2,700);
and other services 2,100).
Responding to the growing economic recession, in March 2009,
the Assembly Committee on Jobs, Economic Development, and the
Economy released a draft economic recovery strategy. The
purpose of the recovery strategy is to provide a blueprint of
specific economic and workforce development actions the state
can take to address the immediate needs of its people and to
provide for its longer-term economic growth, particularly in
the emerging green economy.
In setting a framework in which to consider the proposed
recommendations, the recovery strategy outlines many of the
challenges the state faces in transitioning to a lower carbon
economy. Among these challenges is competition from other
states and abroad for venture capital and the establishment of
new and expansion of existing cleantech manufacturing.
In addition to these external challenges, the recovery
strategy notes that California's inability to reach a
reasonable accommodation among stakeholders on how the state
will develop, review, and enforce regulations could impair its
ability to leverage the full potential of the emerging green
economy. Conversely, without dominance in the green
technology fields, California may be less successful in
meeting its GHG reduction targets.
5)Independent Review of the Scoping Plan : The purpose of the
Scoping Plan is to provide significant background and policy
direction for the state to use in charting a path toward a
lower carbon economy. Questions have arisen about the current
Scoping Plan, however, as to whether ARB has fully addressed
all relevant issues and whether sufficient care has been taken
to chose the most cost-effective, equitable, and least
economically damaging GHG emission reduction actions. These
concerns have been raised by a number of stakeholders
including policy makers, environmental justice groups, and
business and labor organizations. Due to this heightened
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scrutiny, a number of independent reviews were undertaken of
the Scoping Plan. In the subparagraphs below, two of those
reviews are discussed in more detail including identification
of areas that the Legislature may wish to select for special
ongoing oversight.
a) The Legislative Analysts Office Review : According to
the LAO, that undertook its assessment of the scoping plan
based on a request from Assemblymembers Niello and
Villines:
i) Inconsistent and Incomplete Cost-Savings Analysis :
The plan's evaluation of the costs and savings of some
recommended measures are inconsistent and incomplete. As
an example, the plan does not reflect all known costs and
savings for recommended actions in the plan, such as the
"million solar roofs" program where these calculation are
specifically excluded. In other cases, such as the
cap-and-trade program, the plan didn't include its
potential costs and savings because it had not been
developed at the time the plan was finalized. The ARB
does not dispute that the evaluation of the costs an
savings of some recommended measurers are incomplete.
ii) Rudimentary Macroeconomic Modeling : Macroeconomic
modeling results show a slight net economic benefit to
the plan, but ARB failed to demonstrate the analytical
rigor of its findings. Even with additional details of
the ARB's analysis, the LAO concludes that ARB's work
"has, thus far, been very rudimentary."
iii) Limited Use of Economic Analysis in Selection of
Reduction Measures : Economic analysis played a limited
role in the development of the scoping plan. While
statute requires that emission reductions should be
achieved in a cost effective basis, the LAO states that
it appears that reduction measurers were selected first
and the economic analysis was developed after. ARB
confirmed the LAO understanding that economic analysis
played a very limited role in the selection of measures
recommended in the Scoping Plan and in the amount of GHG
reductions assigned to each measure.
iv) Significant Reliance on a Single Regulatory Action :
The scoping plan's overall emission reductions and
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purported net economic benefit are highly reliant on one
measure - the Pavley regulations, AB 1493, Chapter 200,
Statutes of 2002 - which account for 18% of the plan's
emissions reductions and 70% of the plan's net direct
economic savings ($11 billion) to businesses and
consumers. The ARB does not dispute this finding.
v) No Investment Blueprint : The plan fails to lay out
an "investment pathway." The LAO states that the scoping
is deficient in idenitifing an investment pathway that
would describe on a year-to-year basis, what investments
would be required in order to reach AB 32's statutory GHG
emission reductions. The ARB in responding to written
questions by the LAO stated that (1) most measures would
require little up-front capital investment by the state,
(2) what capital investment that would be required would
be financed over many years and annual savings from the
implementation of the measure would offset the annual
costs, and (3) those measure that did require major
capital outlays were in large industrial entities.
In conclusion, the LAO recommended that the Legislature
exercise its oversight as the ARB continues to develop
actions related to the Scoping Plan. This is necessary,
the LAO states, to ensure that AB 32 is implemented in the
most cost effective and efficient manner and that the
weaknesses in the economic analysis can be addressed as
implementation proceeds.
b) U.C. Berkley Center for Labor Research and Education
(UCB) : In February 2009, the UCB released a policy
analysis of the job impacts of AB 32 and identified
potential policy design options to best promote lower GHG
emission reductions and good jobs.
The policy brief states that implementation of AB 32 can
present significant challenges and that green technologies
often require a well-trained technical and blue-collar
labor force. In the absence of careful and farsighted
implementation strategies, the policy brief states that
California could lose businesses to other regions and
ultimately result in trading well-paying jobs for new jobs
of lesser quality. Below is a summary of specific findings
in the UCB analysis:
i) Models have Inherent Limitation : Small overall job
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growth was demonstrated based on UCB's review of the
E-DRAM and BEAR macroeconomic models commissioned by ARB
to forecast the economy-wide effects in 2020. The
analysis also notes that while these are high quality
macroeconomic models, they do have limitations. "One the
one hand, the models assume quick responses to price
signals, access to credit, and full employment of
resources, including labor. As a consequence they do not
fully capture the dislocation that can occur in specific
industries and firms and that may result in job loss for
some. On the other hand, they also do not fully capture
the productivity improvements from future technological
innovations that may lower energy use over time."
ii) Analysis Results in Inconsistent Findings :
Inconsistent findings were identified relative to job
growth within individual industry sectors based on UCB's
review of the E-DRAM and BEAR macroeconomic models.
While in some industry analysis, both models show net job
loss such as in the energy and energy-intensive
industries. In other industry areas, however, the two
models provide divergent results. As in the example,
under the E-DRAM model it shows a 33% decline in jobs in
the generation and distribution sectors, while the BEAR
model shows a 2% gain over the BAU scenario. UCB's
analysis states that inconsistencies in the results
between the models lend doubt to the credibility of the
overall results.
iii) Potential Loss of Higher Wage Jobs : Job losses
anticipated in the Scoping Plan account for about 20% of
all California jobs, have a higher than average wage and
union density, and are disproportionately filled by men
and by Latinos.
iv) Green Economy May Require Different Skills : Growth
in green jobs is not likely to use the skill sets of
workers who are most likely to lose their jobs under AB
32. UCB estimates that 36% of new green jobs will be in
professional, scientific and technical services, 19% in
construction, and 15% in manufacturing.
Overall, the policy brief supports ARB's individual policy
recommendations, but urges the ARB to take specific steps
to protect workers who are likely to lose jobs and improve
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job quality. Among its specific recommendations, the
policy brief recommends that investment is needed in
workforce development initiatives that complement existing
workforce development programs, that provide transitional
worker support and retraining, and that steps should be
taken to ensure that California's green jobs don't become
low-wage jobs.
6)New federal legislation : Encouraged by the White House,
Congress is in the process of adopting, HR 2454 the "American
Clean Energy and Security Act of 2009," the first U.S. climate
change policy which includes provisions for a cap-and-trade
program. The Scoping Plan anticipates the adoption of a
federal program and states that ARB's efforts to "design a
broad cap-and-trade system that works in concert with sector-
or source-related measures and meets the requirements of AB 32
that can serve as a model for a federal program." If
California is to serve as a model for the rest of the nation,
there may need for a greater emphasis on the economic modeling
and analysis of how businesses and workers can successfully
transition from where they are today and where they need to be
in the next five to ten years.
7)Related legislation : The following is a list of bills related
methods for determining the best ways in which the state can
implementation of AB 32 in a cost-effective manner.
a) AB 1033 (Nielsen) - Independent Study for Large Impact
AB 32 Regulations: Requires any state or local agency
adopting a regulation to reduce GHG emissions after January
1, 2010, to evaluate existing regulations and obtain an
independent third-party economic impact analysis if the
regulation is determined to impose potential costs of over
$1 million. Status: Awaiting a January hearing in the
Assembly Natural Resources Committee.
b) AB 1506 (Arambula) - GHG Business Incentive Study :
This bill would have required the Business, Transportation
and Housing Agency (BTH) to undertake a study to determine
the most effective ways for the state to provide incentives
to businesses to reduce their GHG emissions and increase
their energy independence. BTH was required to report its
findings and recommendations to the Legislature by January
1, 2009. Status: Held in the Senate Committee on
Appropriations in the 2007-08 legislative session.
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c) AB 1620 (Arambula) - California Clean Technology
Services Unit : This bill would have established the
California Clean Technology Services Unit within BTH to
serve as a one-stop shop for businesses and investors who
required information on the GHG reduction regulations in
order to develop environmentally-friendly technologies to
meet those regulations. Status: Held in the Senate
Committee on Environmental Quality in the 2007-08
legislative session.
d) ACR 14 (Niello) - Calls upon the ARB to perform a more
accurate and complete economic analysis prior to proceeding
with regulations to implement AB 32. Calls upon the
Governor to use his authority under AB 32 to adjust
deadlines for adoption of regulations. Status: Awaiting a
January hearing in the Assembly Natural Resources
Committee.
e) SCR 131 (Migden) - Calls on the ARB to meet statutory
requirements of the GWSA for the preparation of the best
available economic analysis by ensuring that the analysis
of the emission reduction measures, as proposed in the
scoping plan and related rulemaking, include adequate
analysis of its impacts on workforce issues, as specified.
Status: Held in the Senate Natural Resources Committee, in
the 2007-08 legislative session.
REGISTERED SUPPORT / OPPOSITION :
Support
Coalition for Green Jobs (sponsor)
American Council of Engineering Companies of California
Associated General Contractors of California
Building Owners and Managers Assn of California
California Apartment Association
California Association of Electrical Workers
California Business Properties Association
California Dump Truck Owners Assoc
California Grocers Association
California League of Food Processors
California Manufacturers & Technology Association
California Retailers Associations
California State Pipe Trades Council
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California State Association of Electrical Workers
Coalition of California Utility Employees
Construction Industry Air Quality Coalition
Engineering & Utility Contractors Association
International Council of Shopping Centers
National Association of Industrial and Office Properties
Western States Council of Sheet Metal Workers
Western States Petroleum Association
Opposition
None known
Analysis Prepared by : Toni Symonds / J., E.D. & E. / (916)
319-2090