Why California Cannot Afford to Delay in Global Warming Reduction Actions—Naysayers Are Just Plain Wrong About Economics as They Were About Science

We asked economist Richard McCann to examine the ability of existing economic models to represent cost-saving advantages of market-based policies such as cap and trade. In short, the models don't do this well at all. Dr. McCann articulates several ways in which a well-designed cap-and-trade program will deliver more effective and lower-cost solutions than more prescriptive, “command and control” measures. I have a 2-page summary of that report to give to you today, and Dr. McCann will be offering testimony. The report will be released next month in time for your review before voting on the PSP.

We also asked Steven Moss of M Cubed for an independent review of the literature estimating the job generating potential of AB32. We have a two-page summary of the report available for you today, although Dr. Moss is unfortunately not here to present it. Moss finds that:

- California is well-positioned to transition to a low-carbon economy that generates new “green” jobs
- Many sectors will benefit from these "green" jobs
- These are not just research lab jobs, but appropriate for low- and middle-wage earners and existing trades.
- Well-designed market-based policies are more adaptive, lower-cost options that are more likely to protect jobs than prescriptive, costly “command-and-control” approaches.

There is also ample evidence that AB 32 will provide economic opportunities for small businesses, and we commend CARB on their efforts to engage California’s small business community, including the impending rollout of the Small Business Toolkit.

Many small businesses are already proving what CARB's modeling shows: they're growing their revenues and employing more staff, yet lowering their operating costs and buoying profits by cutting their electricity, garbage and water bills.

I'll take a brief moment to tell you about Veritable Vegetable, a woman-owned wholesale food distributor. By investing in better lights and lighting controls (which paid for themselves in less than one year), by optimizing their 250,000 cubic feet of refrigeration, and by installing photovoltaic roof panels (five years ago), their energy bills have plummeted while their gross revenues have doubled and the number of employees has grown to 100. And their lower operating costs has provided extra profit that they're reinvesting in particulate traps on their fleet of trucks that travel about 2 million miles per year, and to convert one of their trucks to compressed natural gas, which is further avoiding GHG emissions.

Thank you again to Chair Nichols and to the rest of the CARB board and staff. Please don't allow any naysayers to slow our progress toward implementing the measures of the Scoping Plan. We cannot afford to delay.

James "Jamie" Fine is an economist and policy scientist working on state-based initiatives to address global warming. His areas of research and advocacy include design and implementation of cap-and-trade and other market-based policy, modeling the economic, air quality, and health risks of policy decisions, and facilitating the meaningful involvement of public stakeholders in environmental planning.