More Carbon = More Jobs?
California’s ballot initiatives, which permit voters to make sweeping changes in state laws by passing statewide referendums, have sometimes had long-lasting and unintended consequences for the nation’s most populous state.
Perhaps the most profound impact from these annual edicts from Golden State voters came in the late 1970s, when Proposition 13 placed a ceiling on the state’s tax structure. Unfortunately, Proposition 13 did not put a lid on state spending as well, perhaps setting the stage for the Jupiter-sized budget deficits that have afflicted California in recent years.
This year, voters are poised to pass instant judgment on a state law that has not yet gone into effect but already has had a large national impact.
In 2006, California passed a law authorizing a cap-and-trade program for regulating greenhouse gas emissions. The carbon-credit plan, set to go into effect in 2012, was considered a landmark at the time and triggered a national discussion that culminated in the U.S. House of Representatives passing a similar program last year as part of a comprehensive energy bill.
But as the national recession deepened, support for cap-and-trade began to sink amid concerns that any proposal that treats carbon emissions as a regulated commodity—effectively setting a market price for emissions through the trading of carbon credits–will raise energy prices and smother the recovery. The U.S. Senate has yet to act on the House bill, and the Obama Administration is sending signals that it may postpone action on the energy package until after this fall’s Congressional elections. Administration sources also are hinting that cap-and-trade may not make the cut when horse-trading on the energy bill begins in earnest.
If a petition now circulating in California gains enough signatures, California voters will weigh in on this critical issue this fall. The proposition, widely expected to gain a place on the statewide ballot, would postpone any carbon limit until the state economy rebounds. Specifically, it would bar California from implementing its cap-and-trade law until the state jobless rate–currently hovering at a dismal 12.5 percent–stabilizes at 5.5 percent. Barring a near-miraculous economic turnaround, this will not happen before the end of 2012.
Predictably, energy companies and an antitax group are lining up behind the referendum. The energy concerns are issuing dire warnings about increased energy prices and lost jobs if cap-and-trade goes into effect. On the other side of the argument stands the California Air Resources Board, which concedes that the unit price of energy may rise, but notes that Californians’ total energy bills would be reduced through greater efficiency, theoretically freeing up money that could lead to more jobs.
Ironically, at the same time California may be gearing up to put the brakes on a major environmental initiative with national implications, another eco-initiative the Golden State championed has just been embraced on the federal level. The U.S. has adopted a 35.5 mpg fuel efficiency standard for motor vehicles, years after California led the way with its own stringent standard.
As we await the outcome of the coming “jobs vs. carbon” debate out West, one thing remains certain: The problem that cap-and-trade was intended to address isn’t going away anytime soon.