California's ambitious plan to cut greenhouse gas emissions could create
tens of thousands of new jobs and dramatically boost the economy in coming
years, according to two independent analyses released in January 2006.
The reports, one led by economists at the University of California at
Berkeley and the other by Center for Clean Air Policy (CCAP) - a
Washington think tank that emphasizes market solutions to environmental
problems - agree with an earlier draft version of a state plan and reject
concerns that curbing the gases that contribute to global warming would
hurt the economy.
Last June, Governor Arnold Schwarzenegger declared the debate on climate
change over and directed a "Climate Action Team" made up of
representatives from various state agencies to devise a plan to cut the
state's greenhouse gas (GHG) emissions to 2000 levels by 2010, to 1990
levels by 2020 and to 80 percent below 1990 levels by 2050. The climate
team was scheduled to submit a final report to the governor in
California is one of the 10 largest economies in the world and the 12th-
OR 13th-largest producer of greenhouse gases such as carbon dioxide,
methane and nitrous oxide, which are byproducts of industry, agriculture
and motor vehicle use. The state's draft report calls curbing these
emissions "one of the most daunting challenges of our time."
Its emission reduction goals put California in the forefront of efforts
regulate greenhouse gases and years ahead of Bush administration plans,
which reject regulation in favor of voluntary curbs by businesses. The
state's 2050 targets are among the most stringent in the world.
If GHG emissions are not cut, global warming is expected to raise
temperatures between 8 and 10.4 degrees in California and diminish the
Sierra snowpack — a major source of drinking water — by 90
percent in the
next century, according to recent studies that have been incorporated
the state's draft plan. Warming could also raise the sea level between
and 33 inches, causing coastal erosion and sending salt water surging
Sacramento Delta water supplies, the draft plan said.
Such effects could harm the state economically by threatening agricultural
production, increasing the risk of forest fires and increasing utility
costs for cooling. Climate warming could also cause large numbers of
heat-related deaths, increase the incidence of some diseases and lead
higher number of bad ozone days, the plan said.
A draft state plan to meet those goals has been of concern to some
business and industry leaders locally who fear that economic growth could
be compromised and that jobs may migrate to neighboring states with fewer
regulations. However, the two new studies agree with the state draft
report in suggesting that many industry fears are unfounded.
The first study, "Managing Greenhouse Gas Emissions in California,"
prepared by the California Climate Change Center at the University of
California at Berkeley with the support of The Energy Foundation and The
William and Flora Hewlett Foundation. It was released on January 23,
2006. It includes eight independent reports assembled by two dozen
experts under the direction of W. Michael Hanemann and Alexander E.
Farrell. It was prepared to evaluate the economic implications of
Executive Order #S-3-05 signed by Governor Schwarzenegger on June 1, 2005
regarding the risks posed by global climate change to the California
The study found that the cost savings on fuel and gas generated by curbing
greenhouse gases would translate into more money for consumers and more
jobs. In addition, it predicted that investment in technology to reduce
greenhouse gases could pay off for the state in the way that investment
computer technology has paid off for Silicon Valley.
More specifically, the study concluded:
** Climate action in California can yield net gains for the state economy,
increasing growth and creating jobs. Preliminary modeling indicates that
just eight policies that were analyzed in detail can achieve almost half
of the Governor's 2020 targets while increasing Gross State Product by
about $60 billion and creating over 20,000 new jobs.
** There are numerous additional climate action initiatives beyond those
that have been modeled, many of which will also improve California's
economy. The analysis thus far indicates that California can likely reach
the Governor's 2020 targets with a net gain for the stat economy.
** Voluntary measures, while helpful, are insufficient to yield the
required reductions. Designing an effective combination of regulatory
standards market-based approaches (such as a well-designed cap-and-trade
program) and innovation policies is the best way to cost-effectively
manage greenhouse gas emissions in California.
** Technology innovation, spurred by a combination of regulations and
incentives, will be needed to shift the economy over the long term away
from carbon-based fuels and meet the 2050 targets. By acting now,
California can gain a competitive advantage by becoming a leader in the
new technologies and industries that will come into existence worldwide
due to the common goal of reducing GHG emissions.
The January 19 CCAP report, "Cost-Effective GHG Mitigation Measures
California," was financed by the Richard & Rhoda Goldman Fund,
Rockefeller Brothers Fund, and The Energy Foundation, with additional
support from the California Energy Commission (CEC). It analyzed
California's costs to implement a range of GHG emission reduction and
carbon sequestration measures in the agriculture/forestry, cement,
methane, and transportation sectors and reviewed work done for the CEC's
Public Interest Energy Research program for methane and high global
warming potential (GWP) gases (PFCs, HFCs, and SF6).
The study found that the GHG targets announced by Governor Schwarzenegger
can likely be met at no net cost to consumers; in fact, consumers would
save money on gasoline costs and energy bills if the 2020 goals were met.
Specifically, combining cost-effective measures analyzed by CCAP with
measures already underway in California will achieve a total reduction
51 MMTCO2e (million metric tons of carbon dioxide equivalent). This
represents 88 percent of the estimated 58 MMTCO2e reduction required to
meet the 2010 target set by the Governor. Additional cost-effective
reductions are expected to be available in the oil refining and power
sectors, which produced more than 25 percent of California's GHG emissions
in 2002. These reductions would allow the 2010 target to be easily
exceeded. Seventy-seven percent of the reductions targeted for 2010 have
a cost below $10 per ton reduced, while 28 percent of the reductions
results in net cost savings.
For 2020, measures analyzed by CCAP (58 MMTCO2e) combined with measures
already underway in California (67 MMTCO2e) can achieve a total of 125
MMTCO2e out of an expected emission reduction requirement of 145 MMTCO2e.
This represents 86 percent of the total reductions required t meet the
target. Of the measures analyzed by CCAP, 73 percent (42.5 MMTCO2e) have
a cost below $10 per ton reduced and 36 percent (20.8 MMTCO2e) of the
reductions result in net cost savings. Additional cost effective
reductions that are expected to be available in the oil refining and power
sectors should assure achievement of the target.
On an average basis, the reductions identified by CCAP are expected to
cost $5.25 per ton of CO2 equivalent in 2010 and $5.77 per ton of CO2
equivalent in 2020. After accounting for the cost savings expected from
the vehicle GHG standards and energy efficiency programs already underway
in California, the net cost to consumers is expected to be zero.
The study described a number of cost-effective ways to cut emissions,
including capturing methane from landfills and manure and using it to
generate energy, and switching freight transport from diesel trucks to
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The full text of the report "Managing Greenhouse Gas Emissions in
California" can be found at: http://calclimate.berkeley.edu/managing_GHGs_in_CA.html
Copies of the CCAP summary analysis "Cost-Effective GHG Mitigation
Measures for California" and an accompanying factsheet can be downloaded
at the CCAP web site at http://www.ccap.org.
The 15-page analysis can be found at:
Click on the following link for the full news story:
See also a January 23, 2006 article in the "Los Angeles Times"
by Usha Lee McFarling: http://www.latimes.com/news/science/la-me-climate23jan23,0,7558541.story?coll=la-news-science