The state of California likes to sell itself as a leader in the transition to a green economy. The only problem is, their policies are making that transition harder—and they’re not producing the job boom that politicians have been promising.
The California Legislative Analyst’s Office (LAO) recently reviewed the impact of the state’s 2006 climate change legislation, which mandated a cut in GHG emissions to 1990 levels by 2020. A letter from the LAO to the state senator that requested the analysis stated that the aggregate net jobs impact of the 2006 legislation in the near term “is likely to be negative.” Don’t let the tepid language here fool you; this is seriously bad news for California. With so much of its economic future staked on green jobs, green tech, and the viability of green energy—and given that the state currently is suffering with unemployment 20 percent higher than the national average and that it has for months been teetering on fiscal insolvency—news that green policies are hampering the state’s overall economy stultifies lawmakers’ vision for a green-economy-driven future.
And yet, it should come as no shock that legislation mandating the use of more expensive energy sources would result in aggregate losses to an economy. As Heritage senior policy analyst Ben Lieberman has explained before:
Mandates … kill jobs by raising energy costs. The only reason these alternative energy sources need to be mandated in the first place is that they are too expensive to compete otherwise. Thus, in addition to forcibly supplanting traditional energy jobs, renewable energy mandates raise energy costs and thus destroy jobs.
So, for every dollar of capital that is funneled to green projects due to government mandate, there is a dollar less to be capitalized on by more efficient economic agents. The net result, of course, is a sub-optimal economic outcome, and California is not the first economy to make this simple economic logic manifest. Spain has likewise invested hugely in green energy, and a recent study shows the net effect on the country’s economy has been hugely negative. For every green job created in the Spanish economy, the study found, 2.2 private-sector jobs were destroyed.
An adage in politics says that, “As California goes, so goes the nation.” When it comes to climate policy, however, federal lawmakers would be wise take the nation in the opposite direction of woebegone California.
Jeff Witt is currently a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm
As 2009 draws to a close, The Foundry will be posting a series of Top Ten lists highlighting some of The Heritage Foundation’s most influential work. The Top Ten list of WebMemos below is sorted by pageviews below with the most popular memo at the bottom. If we left out your favorite, let us know in the comments.
10. Why the Personal Mandate to Buy Health Insurance Is Unprecedented and Unconstitutional
9. CBO Grossly Underestimates Cost of Cap and Trade
8. Son of Waxman-Markey: More Politics Makes for a More Costly Bill
7. Impact of the Waxman–Markey Climate Change Legislation on the States
6. Waxman-Markey Global Warming Bill: Economic Impact by Congressional District
5. A Principled Path to Rational Health Care Reform
4. Welfare Spendathon: House Stimulus Bill Will Cost Taxpayers $787 Billion in New Welfare Spending
3. 50 Examples of Government Waste
2. Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending
1. The Economic Impact of Waxman–Markey