New climate legislation could add fuel to California’s economy

August 30, 2016

When most people think about the economic effects of green building, they think about the cash that homeowners, property managers and businesses save by reducing their use of natural resources and energy. After all, California's energy-saving programs saved its residents nearly $90 billion on their energy bills between 1973 and 2013, according to the Natural Resources Defense Council. 

However, sustainability's impact goes far beyond patching the hole in end users' pockets. The Golden State's commitment to energy efficiency over the last decade has spurred as much as $48 billion in economic growth, according to new analysis by nonpartisan business group Environmental Entrepreneurs (E2). 

The group attributes much of this stimulus, as well as the creation of about 500,000 jobs, to the goals set forth by a piece of legislation known as AB 32. Signed into law in 2006 by Gov. Arnold Schwarzenegger, AB 32 stipulated that the state would reduce greenhouse gas emissions by 25 percent, achieving 1990 levels by 2020. Since then, California has played host to dozens of new climate policies and seen countless energy-saving innovations arise out of the desert, events to which E2 attributes much of the state's economic growth. 

According to E2, California's aggressive energy goals have helped create about 500,000 jobs. According to E2, California's aggressive energy goals have helped create about 500,000 jobs.

On to 2030
If E2's analysis is correct, The Golden State could be positioned for 14 more years of continued growth. 

The California Legislature recently passed an extension to AB 32, which Gov. Jerry Brown is expected to sign into law presently. Known as SB 32, this law would push the state to reduce GHG emissions down to 40 percent of 1990 levels by 2030. While Brown set this target in an executive order issued earlier this year, this summer's activity would officially make it a law.

The legislature also voted to pass AB-197, which broadens the scope of the California Air Resources Board, ThinkProgress reported. 

"With these bills, California's charting a clear path on climate beyond 2020 and we'll continue to work to shore up the cap-and-trade program, reduce super pollutants and direct more investment to disadvantaged communities," Brown said in a statement.

A source of debate
While the E2 analysis suggests the new law will be a boon to the California economy, industry groups worry about the effects it might have on their already shrinking markets, Bloomberg reported. While California has been successful in pursuing its energy goals since 2006, it has also seen a decline in the manufacturing sector, whose 15.7 percent job decline outpaced the national average of 14.8 percent. 

Last year, this voice of opposition was successful in voting down a bill in the California Legislature that would have cut petroleum use in half by 2030, the New York Times reported. 

Despite these dissenters, Gov. Brown is confident in his aggressive stance against climate change. 

"The effort to decarbonize our economy in California and in our country is a tough hill, and there is opposition," Gov. Brown said, according to the Times. "They have been vanquished, and vanquished in a very solid way. So bring it on; there will be more battles and more victories."

Potential legislation in New York and Colorado could follow in California's footsteps, reducing GHG emissions statewide. Potential legislation in New York and Colorado could follow in California's footsteps, reducing GHG emissions statewide.

These battles will likely transcend the borders of California, as the Golden State's leadership in climate policy is beginning to pick up momentum throughout the country. According to the New York Times, the governor of Colorado is currently considering an executive order that would call for a 35 percent GHG reduction from the state's power plants. Similarly, New York is working toward cutting its power plant emissions in half.