California Climate Battle Reveals Lack of Accounting for All Costs

Economists, particularly economists at conservative think tanks, have been busy this month telling California voters that the state climate law, AB 32, is bad for the economy. We’re in a recession, the thinking goes, and we don’t want to add any more financial burden to businesses that are already cash-strapped.

The problem with that thinking is that it doesn’t take into account the true cost of dealing with unchecked pollution, a point that expert after expert made at the recent Turning the Tide conference on environment and public health.

“The current fight over AB 32 is setting up a false choice between economic stability and environmental stability,” said Peter Calthorpe, principal of Calthorpe Associates and an advisor to the California Air Resources Board on the implementation of the climate law.

“Adam Smith said: ‘Perfect markets are dependent on perfect information,’ and right now the markets do not have perfect information."

AB 32, passed in 2006 and due to be implemented next year, would set up a statewide carbon cap-and-trade program. Opponents of the legislation have proposed a November ballot initiative to stop its implementation.

The opposition is playing on the idea that legislating greenhouse gas emissions will cost California businesses money, and thus result in more job losses in the state. A recent study by the Union of Concerned Scientists, however, found that AB 32 would have little effect on small- or medium-sized businesses. Instead, it found that the legislation would predominantly affect large industrial polluters, such as utilities and oil companies, which may explain why some Texas oil companies are throwing so much money at stalling the law's implementation.

Given the billions of dollars being spent on it, the anti-AB 32 measure is likely to get enough signatures to make it onto the November ballot. It started out dubbed the “California Jobs Initiative,” but Attorney General Jerry Brown has since it renamed for clarity. It's now called “Suspends Air Pollution Control Laws Requiring Major Polluters to Report and Reduce Greenhouse Gas Emissions That Cause Global Warming Until Unemployment Drops Below Specified Level for Full Year.”

That name, at least, helps voters to understand what the initiative is really proposing, but the “false choice” Calthorpe mentioned is still there.

Calthorpe emphasizes that legislating emissions now sets California up for a better economy in the future and that whether businesses pay for polluting or not, there are costs associated with pollution. If the businesses that create it don’t pay for it, the rest of us soon will, as evidenced by the EPA’s Climate Change Indicators report, released Tuesday.

“Capitalism and sustainability aren’t at war,” Stephen Schneider, a climatologist and Nobel laureate told the Turning the Tide crowd in California last week.

“The particular system doesn't matter, it's about accountability within that system. After all, the Soviet Union was one of the worst polluters in the world. Right now the government essentially pays for corporate progress; you need to input all of the costs associated with any given product or service in order to get the price right."

Beyond California