Proposition 23 - The Job Killer

Jobs or the environment - that is the choice presented by Proposition 23, a ballot initiative sponsored mainly by oil refiners, which proposes to suspend California's greenhouse gas law, AB 32, until unemployment drops below 5.5% for a year. But that is a false choice. The choice we really face is about the short term versus the long term.

The argument for Proposition 23 is simple - limiting greenhouse gas emissions under AB 32 will cost money, and will likely cost jobs in industries that generate greenhouse gasses. Based on that logic, Proposition 23 would only allow implementation of the greenhouse gas reductions currently in California law if California unemployment drops below 5.5% (it is currently over 12%) for a year.

But if California unemployment stays higher than 5.5%, or even if it drops to 4%, but bumps up to 6% after three quarters, then California would take no action to reduce greenhouse gasses.

Under Proposition 23, regardless of why unemployment is higher than 5.5%, California would take no action to reduce greenhouse gasses. Even if unemployment is high because jobs are being lost due to climate change - think of ski resorts closing due to no snow, fisheries destroyed due to changes in water temperature, beach resorts and airports damaged by higher sea levels, redwood forests dying from heat, valuable crops lost due to extreme weather conditions, and rivers running dry - we still would take no action.

The logic of Proposition 23 is the logic that says don't limit logging until all the trees are gone, because limiting logging takes away logging jobs that could last a few more years, or don't limit fishing until all the fish are gone, because limiting fishing takes away fishing jobs that could last a few more years. But how many logging jobs are there when all the trees are gone? How many fishing jobs are there when all the fish are gone?

If Proposition 23 passes, the oil refiners and other carbon-intensive industries who are backing it may get to make their profits for a bit longer. But at what long term cost? What happens when California and the rest of the world start really suffering from the effects of climate change? The potential job losses could make us nostalgic for the time when unemployment was only 12%.

Is it worth gambling with our economy, our health, perhaps even our survival, so that a few large companies can squeeze out a few more profitable years? The short term benefits to Valero and Tesoro are not worth the long term costs to every Californian and every California business. Vote no on Proposition 23 - we cannot afford it.

Cap and Trade: The Good, The Bad, and The Ugly

Cap and Trade as a method for addressing greenhouse gas emissions has been hailed as the savior of the earth and demonized as the destroyer of our society. While it could end up being one of those, most likely it is neither. There are aspects of it that are good, some that are bad, and some that are just plain ugly.

The Good: It has a cap. If you are trying to control greenhouse gas emissions, having a firm and specific cap does it. (A carbon tax does not do this.) The cap on emissions would get lower over time, bringing down greenhouse gas emissions levels.

The Ugly: Setting the level of the cap and the rate at which it gets reduced. If the cap is set too high, it effectively does nothing to reduce greenhouse gas emissions. If the cap is set too low, you get significant economic and social disruption, as higher carbon industries or processes are forced to either shut down or rapidly change, potentially at great expense.

The Good: Theoretically, the trading of emissions allowances will result in a fair price being put on greenhouse gas emissions. No one has to try to calculate a carbon price - the market will just do it.

The Ugly: This pricing theory only works if the level of the cap is about right, and it only works if the allowances are not initially given away (or priced too high, but this seems less likely), and it only works if the market is set up properly with rules and enforcement to prevent fraud and gaming.

The Bad: If the initial allocation of allowances is made by giving them away, particularly if they are allocated based on past emissions, then the public is (again) subsidizing the emitters, and the price for carbon will be artificially low.

The Ugly: Allocation of allowances by auction would appear to be the approach that would result in the most accurate price for carbon, but then there will be arguments about who should get the proceeds from the auction. New clean technologies? Consumers? Dirty industries that need help cleaning up? The outcome will most likely be based more on politics than on sound policy.

This is just a quick examination of cap and trade - it does have some good aspects, and some bad aspects, but mostly it is just ugly.