Factoid #15 — California Can Meet Greenhouse Gas Reduction Targets at no Net Cost While Creating 20,000 Jobs And Expanding State’s Economy $60 Billion
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 mid-February.
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 to 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 in the state’s draft plan. Warming could also raise the sea level between 4 and 33 inches, causing coastal erosion and sending salt water surging into 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 to a 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,” was 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 economy. 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 in 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 for California,” was financed by the Richard & Rhoda Goldman Fund, the 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 of 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 rail.
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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: http://www.ccap.org/domestic/Summary%20Report-Final%20_1-19-06_.pdf. 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