As usual, California is the battlefront for energy and climate change issues. Oil refiners Valero and Tesoro have spent $5.5 million dollars in support of California’s Proposition 23, which would effectively repeal a 2006 law requiring the state to get its emissions of greenhouse gases down to 1990 levels by 2020. Another $1 million was contributed by Flint Hills Resources, an oil refining company owned by the Koch brothers, who were recently profiled in The New Yorker for their behind-the-scenes role bankrolling the Tea Party.
The Global Warming Solutions Act was intended to bring the state into belated compliance with Kyoto Protocol targets. That would require lowering California emissions by about 25% compared to business-as-usual projections. The bill requires large industrial polluters to track and report their greenhouse gas emissions and sets up a board to regulate some of the major sources of greenhouse gases, like fossil fuels.
Technically, Proposition 23 would merely suspend the law until California’s unemployment rate drops below 5.5% for four consecutive quarters. But with California’s unemployment rate hovering around 12%, that could be a while. Even in the best of times, the state’s unemployment rate rarely stays below 5.5% for a year at a time. Supporters of Proposition 23 argue that not suspending the law will cost the state “up to 1.1 million jobs”—which would raise the unemployment rate another 5%—and shrink the state economy by 10%. But as California’s non-partisan Legislative Analyst’s concludes, those projections are so dubious as to be “essentially useless.”
A more reasonable estimate from Charles River Associates is that keeping the law as it is could reduce the state’s income as much as 1% by 2020. There’s no question that’s a substantial cost. But as more than 100 economists argued in an open letter, the law is a valuable investment in a cleaner and more efficient economy. And, far from costing the state jobs, a Berkeley study found that the law directly created clean technology jobs, which have been one of the only engines of job growth in the recession. That’s why, as the San Jose Mercury News wrote in an editorial, California technology companies like Google, Apple, Cisco, Intel, Applied Materials, and eBay all support the original bill.
Of course, oil refining companies like Valero and Tesoro—both have their headquarters in Texas—don’t care that much about unemployment in California. Their most immediate concern is how much it would cost them to comply with the law. And they’re afraid that California’s clean energy policies might be adopted by other states if they don't stop them now. As former Reagan Secretary of State George Shultz—who's leading the campaign to defeat Proposition 23—says, that’s “one reason why these outside companies are pouring money in to try to derail the same thing. At the same time, the reverse is true: they put this fat in the fire and if we win, that also sends a message.”