NO on Prop 23

I submitted the following op-ed to the San Jose Mercury. They rejected it. My blog has accepted it...

With the state’s unemployment rate stuck at around 12 percent, many Californians are suffering and desperate for a paycheck. Exploiting their pain, two Texas oil companies, a pair of out-of-state billionaires, and other backers of Proposition 23 hope to convince voters to effectively repeal California’s landmark clean energy law in the name of protecting jobs.

In fact, passing Prop 23 would protect fossil fuel industry profits, not jobs, which explains why it is being bankrolled by the Valero and Tesoro Texas oil companies and a Kansas-based company owned by the Koch brothers, who made their fortune in the oil industry. Rather than protecting jobs, Prop 23 would indefinitely delay sensible measures to create a clean energy economy.

Prop 23’s target, the Global Warming Solutions Act (AB 32), requires California to reduce emissions of heat-trapping pollution to 1990 levels by 2020, and it lays the groundwork for cost-effective means of achieving this goal, including market-based “cap and trade” regulation. As an economist who teaches environmental policy, I was delighted to see California adopt an approach that economists have urged for years—one that harnesses market incentives and competition to achieve pollution reductions at minimal cost.

What does clean energy mean for employment? The net impact on California’s employment picture is likely to be so small as to be barely noticeable in the unemployment statistics. While some of our clean energy law’s provisions will add to the short-term cost of doing business, most independent estimates find these costs to be quite modest. Offsetting these transitional impacts will be new “green jobs” in the renewable energy and energy efficiency sectors. Clean technology is a growth industry, and California has been a significant beneficiary of that growth. Venture capitalists poured $2.1 billion in “clean economy” investment capital into California in 2009 alone, 60 percent of the total in North America.

But the biggest reason that California’s clean energy law will have little impact on the employment situation is that California’s economic crisis is first and foremost a product of the financial crisis and the resulting global recession, not state energy policy. Why California’s unemployment rate is higher than the national average is subject to debate, but likely suspects include the severity of California’s real estate collapse, along with the poor fiscal condition of our state and local governments.

Prop 23 would create regulatory uncertainty that could compound the damage to California’s economy for years. Regulations work best when they are stable and predictable, so businesses and consumers can make plans to adapt to them. Prop 23 would render such plans contingent on an unknowable future path of the state’s labor market, creating unnecessary costs and further delays.

While California can’t solve global warming on its own, our leadership can make a big difference. There are two reasons we must move forward. First, California is a huge economy and a significant source of global warming pollution in its own right. Second, what our state learns about clean energy alternatives and market-based climate policies will have a ripple effect well beyond our borders.

If global warming continues unchecked, the long-run impacts of coastal flooding, wildfires, and drought represent a serious threat to our economy and way of life. That’s why when the Union of Concerned Scientists invited me to sign an open letter from more than 100 Ph.D. economists urging Californians not to delay implementing AB 32, I was glad to do so, and I urge you to join me in voting No on Prop 23 in November.