California Proposition 23 and Implications for Cleantech
October 11th, 2010
Proposition 23, which would Suspend AB 32, the Global Warming Act of 2006, is on the November 2, 2010 ballot in California. Assembly Bill 32 (AB 32) is known as the Global Warming Solutions Act of 2006. The act, passed by the California State Legislature and signed by Arnold Schwarzenegger, is California’s landmark clean air legislation which requires that greenhouse gas emission levels in the state be cut to 1990 levels by 2020. As part of this process, utilities in the state are required to obtain a third of their power from renewable sources. If Proposition 23 is passed, AB 32 would be suspended until the state’s unemployment rate drops to 5.5% for four consecutive quarters. To put that number in perspective, California’s unemployment rate, which currently hovers around 12%, has been at 5.5% or below for four consecutive quarters just three times since 1980.
Arguments for Prop 23
The arguments for Prop 23 are summarized here in a column quoted from the Orange County Register:
“By approving Prop. 23, voters can stall implementation of the Global Warming Solutions Act of 2006 and perhaps save more than 1 million jobs until state unemployment falls to 5.5 percent for four consecutive quarters. Unemployment has been above 12 percent for more than a year.
We prefer permanent repeal of the 2006 law. For now, we urge at least a delay of its disastrous economic effects and infringements on private-sector freedoms.”
Arguments against Prop 23
Quoted here from The Herald (Monterey County)
“California achieved greatness through innovation and the success of clean industries such as aerospace, high tech, film and education. At the moment, it is poised to lead the nation again through the development of various clean-tech ventures, but that would be wiped out overnight through a ballot measure intended primarily to help the shareholders of Tesoro and Valero and Occidental Petroleum.”
My Take on Prop 23
Consider some facts on California’s clean energy sector
* The number of clean energy businesses and clean energy jobs has increased in California 45% and 36%, respectively, in the period between 1995-2008. This rate of growth is 10 times more than the state’s average job growth rate.
* California has over 12,000 clean energy businesses  and 500,000 people are employed in clean energy occupations.
* With over $9 billion in venture capital funds, California’s clean energy firms have received 60% of venture capital funds in North America
With such data, how can anyone make a plausible argument that AB 32 will lead to more job losses? The manufacturing jobs that proponents of Prop 23 are trying to win back are gone – forever. The globalization of commerce has made low wage countries the predominant destination for these jobs. Simple economics dictate that these jobs will continue to go to low wage countries. To stay ahead of the curve and grow our country’s GDP, we must continue to innovate and create products and services that can’t be won over by lower labor costs. Research and development in the clean energy sector will contribute towards that great cause and create more jobs, not reduce them. California is the leading state when it comes to cleantech and if Prop 23 were to pass, it would be a huge blow to the development of renewable energy and energy efficiency all across the country. If you’re a California resident, do yourself and your neighbors a favor and vote NO on Prop 23.