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Arnold's Global Warming Scheme May Terminate California Jobs

 

DATE: June 9, 2005

BACKGROUND: Vowing to make his state a "leader in the fight against global warming," California Gov. Arnold Schwarzenegger has unveiled a plan certain to warm the hearts of green activists and to send chills down the spines of ordinary hard-working people.  Under an executive order signed by the governor on June 1, California is to reduce its greenhouse-gas emissions to 2000 levels by 2010, or by 11 percent below what they would be without the governor's action.

TEN SECOND RESPONSE: Gov. Arnold Schwarzenegger's latest green initiative is likely to make California even more unfriendly to business and new jobs.

THIRTY SECOND RESPONSE: In the worst tradition of the Kyoto Protocol, Gov. Schwarzenegger's plan targets emissions of man-made greenhouse gases, mostly from the use of fossil fuels to produce energy.  Yet it is by no means clear what effect these gases have on global climate, something that has been subject to natural variations, including many ice ages, ever since the planet was created billions of years ago.

DISCUSSION:

Vowing to make his state a "leader in the fight against global warming," California Gov. Arnold Schwarzenegger has unveiled a plan certain to warm the hearts of green activists and to send chills down the spines of ordinary hard-working people.

In a recent speech before the United Nations World Environment Day conference in San Francisco, the governor set the goal of slashing California's greenhouse-gas emissions by 80 percent over the next half-century.  Under an executive order Schwarzenegger signed June 1, California is to reduce its greenhouse-gas emissions to 2000 levels by 2010, or by 11 percent below what they would be without the governor's action.  By 2020, the state's emissions are to be cut to 1990 levels, or by another 25 percent.  And by 2050, California's emissions -- somehow -- are to be reduced by 80 percent below what they were in 1990.1

The word "somehow" is key here, because Schwarzenegger conspicuously failed to say exactly how all this is to be accomplished.  The executive order he signed is virtually impossible to enforce, leaving the matter to the tender mercies of the California legislature to put a bite behind Arnold's bark, if it so chooses.  Lest Californians have any illusions about where that can lead, they need only be reminded that this is the same legislature whose love for exorbitant taxes and Byzantine regulations has been killing jobs in California for years.  Or has anyone forgotten the legislature's "energy deregulation" scheme of a few years ago that led to rolling blackouts of the kind one would expect to see in what are politely called "developing nations."  Schwarzenegger has just given this crowd the green light for more regulatory mischief.

Indeed, the only climate that will be affected by the governor's global warming scheme is the state's already deteriorating business climate to which the Terminator has dealt another staggering blow.  An analysis of California's competitiveness conducted last year for the California Business Roundtable shows how the Golden State's luster is wearing off.  Here are just some of the findings:

*  The cost of doing business in California is 30 percent above the Western state average, 6 percentage points of this gap stems from state regulations alone, with regulatory costs 105 percent higher than other Western states.

*  A typical small manufacturer with operating income of $2000,000 would be earning more than $1 million if it were located in a lower-cost state like Nevada, Georgia or South Carolina.  (The National Federation of Independent Businesses already ranks California the second toughest state in which to run a small business.)

*  Fifty percent of the companies interviewed have explicit policies to halt employment growth in the state while less than 5 percent of companies have retention policies in place to keep jobs in California.

*  Forty percent of CEOs interviewed in the survey plan to relocate jobs from California.2

All this was going on before Gov. Schwarzenegger decided to pile on even more burdens to the cost of doing business in California.  And for what?  In the worst tradition of the Kyoto Protocol, Schwarzenegger's plan targets emissions of man-made greenhouse gases, mostly from the use of fossil fuels to produce energy.  Yet it is by no means clear what effect they have on global climate, something that has been subject to natural variations, including many ice ages, ever since the planet was created billions of years ago.  

Even if all the signatories of the Kyoto Protocol met their emissions-reduction targets (which only a few are currently doing), the net effect of the global warming treaty on the climate will be minuscule, according to an estimate prepared for the UN's Intergovernmental Panel on Climate Change.3  But it would come at an estimated cost of between $107 trillion and $274 trillion (in current dollars).4  Thus, at an astronomical cost, Kyoto's effect on the climate is a pittance, and the effect on global temperatures of Arnold's scheme for California is a pittance of a pittance.

Many hopes were pinned on Arnold Schwarzenegger when he became governor in late 2003.  He inherited a mess, and cleaning it up has been a task worthy of a Mr. Universe.  But with his approval ratings falling, he's now seeking refuge in Hollywood showmanship.  Arnold has sided with such Tinsletown luminaries Barbara Streisand, Leonardo diCaprio, Robert Redford, Chevy Chase and Paul Newman in embracing another fashionable, and potentially destructive, environmental cause.  If this keeps up, ordinary Californians may have to seek greener pastures elsewhere.


by Bonner Cohen

Contact the author at: 202-543-4110

The National Center for Public Policy Research
501 Capitol Court, N.E.
Washington, D.C. 20002




Footnotes:

1. Miguel Bustillo, "Gov. Vows Attack on Global Warming," Los Angeles Times, June 2, 2005

2. See http://www.cbrt.org/other_exec_summary.html and http://www.nfib.com/object/sbcca0605.html

3. Bjorn Lomborg, "The Truth About the Environment," The Economist 4 August 2001: 65

4. Bjorn Lomborg, The Skeptical Environmentalist: Measuring the Real State of the World (Cambridge University Press, Cambridge, U.K., 2001): 305-318

 


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