California Carbon Rationing Is a Jobs Killer—Who Could Have Possibly Known that Boosting the Price of Electricity Would Do That?

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Back in 2006, California's legislature passed and then-Governator Arnold Schwarzenegger signed the California Global Warming Solutions Act which aims to reduce the Golden State's greenhouse gas emissions to 1990 levels by 2020. As I reported earlier this goal would be achieved by a mix of policies including a cap-and-trade carbon market along with a set of complementary measures. Those measures include setting fuel efficiency standards for appliances and buildings, requiring that 33 percent of the state's energy be produced from renewable sources, setting a low carbon fuel standard for vehicles, and zoning changes to discourage automobile travel, among other new regulations and mandates.

A 2010 study by the California Air Resources Board, the agency in charge of implementing carbon rationing under the Global Warming Solutions Act, reported that its best case analysis estimated that implementing the law would boost California's employment by 10,000 extra jobs by 2020; its worst case projected 330,000 fewer jobs than there would otherwise have been by 2020.

A new study commissioned by the California Manufacturers and Technology Association finds that that worst case is the likely case. From the press release:

California families will be forced to pay $2,500 annually and lose $900 in earnings per year by 2020 as a result of the California Global Warming Solutions Act, according to a study released today. The costs to families will start to mount immediately in 2013. Losses to employers and the state's economy will be counted in the billions….

The study also shows 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.

These figures were reached based on an "optimistic" scenario, where costs for each policy are assumed to be at the low end of a range of expected costs and the environmental goals are achieved. It assumes plentiful low carbon fuel with limited demand outside of California, 2.5 percent energy efficiency improvements and a significant reduction in vehicle miles traveled.

When less optimistic projections are used, the costs are staggering. In the study's "high case" scenario, families pay $4,500 in annual costs and California receives $38.8 billion less in local and state tax revenues by 2020.

Even in the rosiest of scenarios, the "low case", families still pay $1,300 in annual costs and California loses $15.8 billion in local and state tax revenues.

Just the sort of economic boost from green energy policies that that a state with nearly 11 percent unemployment needs.