With the legislature just passing a landmark extension of cap-and-trade through 2030 by a supermajority vote, attention now turns to implementing the state’s major climate programs to achieve the ambitious climate goals for that year and beyond.
Critics frequently argue that efforts to fight climate change hurt the economy and cost jobs. Yet as I blogged about a few weeks ago, research on California’s San Joaquin Valley and then-forthcoming from the Inland Empire show net positive results.
The Center for Law, Energy and the Environment (CLEE) at UC Berkeley Law and UC Berkeley’s Center for Labor Research and Education, working with the nonpartisan nonprofit Next 10, just released the first comprehensive cost/benefit study of climate policies in Southern California’s Inland Empire, one of California’s most environmentally vulnerable regions.
The Net Economic Impacts of California’s Major Climate Programs in the Inland Empire: Analysis of 2010-2016 and Beyond examines the impact of four climate programs in the region, defined here as San Bernardino and Riverside Counties. We chose these counties as a follow-up to our San Joaquin Valley report due to the region’s environmental and economic challenges and because elected leaders from the area have asked questions about the impact of climate policies on their constituents.
The report analyzed not only the benefits of California’s climate and clean energy policies, but also compliance expenditures, investment expenses, and other costs.
After examining the data and using advanced modeling software, we found that the four key California climate and clean energy policies, including cap and trade, the renewables portfolio standard, distributed solar policies and energy efficiency programs (among the most important in California’s suite of climate policies) brought a net benefit of $9.1 billion in direct economic activity and 41,000 net direct jobs from 2010 to 2016 in the region, some of which are permanent and ongoing and many of which resulted from one-time construction investments.
We found that the overall benefits to the Inland Empire are likely to continue and grow through 2030, as the state strives to meet its newly legislated climate goals for that year, via SB 32 (Pavley, 2016), SB 350 (De Leon, 2015), and now AB 398 (Eduardo Garcia, 2017). Those efforts will require at least 50% renewables by 2030, a doubling of energy efficiency in existing buildings, and a robust cap-and-trade program through 2030.
Based on the findings in the Inland Empire, we suggest that policy makers wishing to continue these benefits focus on policies that reward cleaner transportation in this region, help disburse cap-and-trade auction proceeds in a timely and predictable manner, and create robust transition programs for workers and communities affected by the decline of the Inland Empire’s greenhouse gas-emitting industries, including re-training and job placement programs, bridges to retirement, and regional economic development initiatives.
The California Legislature may vote on reauthorizing California’s cap-and-trade program as soon as Monday. The program needs a two-thirds vote to inoculate the auction mechanism to distribute allowances from legal challenges, which is a heavy political lift that has required a lot of compromise and concession.
But in the midst of the debate, state legislators are lacking crucial data on the impact of the program to date on some of California’s most environmentally and economically disadvantaged regions, particularly the San Joaquin Valley and Inland Empire.
To fill that gap, CLEE and the UC Berkeley Labor Center teamed up earlier this year to release a report on the economic impacts of California’s major climate programs on the San Joaquin Valley. And using the same methodology and publicly available data, we are soon to release a follow-up report on the Inland Empire, both sponsored by Next 10.
But with the vote looming on cap and trade, we wanted to release our findings on the impact of cap and trade on the Inland Empire in particular, as well as summarize our previous findings from the Valley report. Our new op-ed in yesterday’s Daily Bulletin summarizes the data:
After accounting for the costs and loss of jobs in industries required to comply with cap and trade, as well as the benefits from investments of cap-and-trade revenue, we found in the Inland Empire, the program had net economic impacts of $25.7 million, $900,000 in tax revenue and net employment growth of 154 jobs.
These net benefits do not account for funds that have been appropriated but have not yet been spent. Since only about one third of appropriated funds have so far been spent on projects in these regions, the positive impacts will only grow. When we account for the expected benefits after all funds collected are reinvested in projects, the net economic benefit reaches nearly $123 million, with 945 jobs created and $5.5 million in additional tax revenue.
We found even greater net positive impacts in the San Joaquin Valley, totaling $202 million in economic activity, along with $4.7 million in state and local tax revenue. The program also created 1,612 net jobs in the Valley. When including expected benefits after all funds collected are reinvested in projects, this figure balloons to nearly $1.5 billion in economic benefits. These projects will create 7,400 total jobs, including more than 3,000 direct jobs in the San Joaquin Valley.
We hope this information will be useful to the public and to legislators as they decide on the program’s fate beyond 2020. I will post again on the report once it’s available for release.