Capping Emissions and Unleashing Economic Growth | Scorcher
Sheldon Zakreski, The Climate Trust
Weekly Policy and Finance Update – September 19, 2017
|Bottom line | Two suburban counties with a substantial industrial and manufacturing economy in southern California are growing economically because of a greenhouse gas cap and trade program and not in spite of it.
California’s Inland Empire is not a place that commonly comes to mind when people think of the Golden state. It’s not home to Hollywood starlets or tech entrepreneurs. Most people live there because housing is affordable, but they consume a lot of energy to keep their homes cool and drive long distances to their jobs. Traditional industries such as oil and gas production, fuel suppliers, mining and paper manufacturing play a significant role. The region also struggles with incomes that are 75% of the state-wide average and 17.5% of citizens are living below the poverty level. This could be Anywhere USA.
This is the type of place we’re told would be ruined by putting a price on carbon. Yet researchers at the University of California at Berkeley have found the economic gains from California’s climate policies exceed its costs for the Inland Empire. The main reason is that the distribution of proceeds from the state’s auctions of carbon permits, have proven to be an effective driver of regional economic development. The study found that after accounting for carbon compliance costs and lost economic activity the region has experienced net benefits of $25.7 million in economic activity and 154 additional jobs. This increased economic activity has generated an additional $900,000 in local and state tax revenues, meaning governments could expand services or cut taxes because of cap and trade.
These numbers tend to understate the benefits, since compliance costs are incurred before auction proceeds are spent. Therefore, the net benefits will continue to rise over time assuming the additional auction proceeds dispersed to the region are spent in a similar pattern. This is positive news not just for the Inland Empire, but for any state considering cap and trade. It shows we can reduce emissions, create new jobs, and even cut taxes.
This is something that is sorely needed in Anywhere USA.
Research and Resources
The Net Economic Impacts of California’s Major Climate Programs in the Inland Empire
Center for Labor Research and Education, UC Berkeley
Top News Headlines
Study: State Climate Policies Boost Inland Empire’s Economy
Larry Buhl, August 23, 2017, Capital & Main
California defies Trump claim that environmental regulation kills economic growth
Emma Foehringer Merchant, August 22, 2017, Grist
Nothing But Clear Skies Blog
Capitalism, An Unlikely Champion for Climate Action
Kristen Kleiman, July 12, 2017
Image credit: Flickr/Bemep