In 2006, when California enacted AB 32 – its landmark anti-global warming law – few disputed that there was an economic downside to forcing residents and businesses to use cleaner-but-costlier energy by 2020. This risk was deemed acceptable because the Golden State was going to inspire the world to reduce the threat posed by climate change. But the risk was acknowledged by Gov. Arnold Schwarzenegger, who insisted on a provision that allowed a governor to suspend AB 32 in times of economic distress.
Since then, however, Schwarzenegger has abandoned his old caution. Instead, he has echoed the green zealots at the state air board in depicting AB 32 as a job-creation measure.
Thankfully, the old Arnold may be back. This week, the air board launched its latest attempt to promote its AB-32-is-awesome narrative, releasing a study by the AB 32 Economic and Allocation Advisory Committee. It didn’t claim the law would be an economic bonanza. But it also dismissed the argument that California would be at a huge economic disadvantage if its energy costs were much higher than those in rival states and nations. The study concluded that AB 32’s “cap-and-trade” system – in which companies would buy and sell the rights to emit pollutants – would be a wash in its economic impact, hurting some industries and helping others.
The governor responded by sending a letter to air board Chairwoman Mary Nichols that politely but clearly took sharp exception to the study’s support for aggressive implementation of AB 32.
“I strongly support a more carefully phased approach to development of an auction [of emission allowances] system, beginning with a very small percentage of allowances,” Schwarzenegger wrote. He stressed that the state’s approach should mesh “as seamlessly as possible into a comprehensive national strategy” for reducing greenhouse gases. “Given the importance of interstate and international trade to California’s economy, we must design our program to ensure that California companies are appropriately positioned to compete under any future federal or international program.”
The governor’s staff questions any suggestion that this is a change in direction. But it is impossible to reconcile the letter to Nichols with a statement his press secretary released in December ridiculing the idea that AB 32 might hurt the economy. It is impossible to reconcile the letter with Schwarzenegger’s executive order in September to sharply increase the percentage of cleaner energy the state must use by 2020.
Perhaps the governor is trying to slow the growing momentum behind a proposed ballot measure meant to kill AB 32 until state unemployment is far less than its present 12.7 percent. But whatever the motive, it’s good news. No other state or nation has yet been inspired to copy AB 32, which means the law would subject California’s economy to unique risks. It makes infinitely more sense to have a national and international approach to dealing with climate change.
Schwarzenegger used to understand this. Now, it appears, he does so again.