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California’s Crazy Climate Policy

by Gary D. Libecap

In 2006, the California Legislature enacted AB 32, the Global Warming Solutions Act that directed greenhouse gas emissions in the state to be at their 1990 level by 2020. To get a sense of what that means for the state, in 2006, California’s population already was 23 percent larger and its economy nearly a trillion dollars larger than in 1990, and it will be larger still in 2020, although how much larger depends in part on the costs imposed by this law.

As the ambitious title of the legislation suggests, California was committing itself to battling climate change by dramatically reducing greenhouse gas emissions across the state’s economy. Targets and timetables were set; state agencies, notably the California Air Resources Board, were empowered to implement regulations; and new subsidies, mandates, and restrictions were inaugurated.

With the feel-good mentality associated with the so-called “triple bottom line” of “people, planet, and profits,” the notion in the legislature was that California could make a real difference in global climatic conditions through emissions reductions. No doubt many legislators believed this groundbreaking law would contribute to lower greenhouse gas levels and in so doing, mitigate the possible effects of global warming. Many applauded the state’s efforts to cut greenhouse gases and to promote new renewable energy alternatives. Further, constituencies stepped up to seek state government financial and regulatory support for solar energy, wind power, energy-saving home and business improvements, and more fuel-efficient vehicles.

Those heady days, however, seemed to be coming to an end during the election campaign of 2010 when, in the face of 12 percent unemployment and a struggling state economy, Proposition 23 was put forth to voters. Prop 23 was designed to delay implementation of AB 32’s sweeping agenda until the economy recovered and unemployment fell to its 2006 level. Even so, it was defeated on November 2 by California voters. The path set forth by AB 32 in 2006 appears set to continue at least for the time being.

Despite AB 32’s lofty objectives, California’s actions will have no direct impact on global greenhouse gas emissions or on any predicted pattern of climate change. In this essay, no effort is made to address questions of whether climate change is real or of the links between human actions and climatic conditions. Rather, the objective is to show why California’s unilateral actions are costly to the state and why they will bring no direct global climate benefits.

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