Economic Analysis of SB32 Desperately Needed

For decades, California has been at the forefront of the "green" movement. Environmentalism has been a way of life here for as long as some of us can remember. Earlier this year, the California Legislature took a major leap forward in environmental regulation when it passed Senate Bill 32. But amid the celebration and back-slapping over the passage of this landmark legislation, a growing number of economic and energy experts are raising concerns about SB32’s known and unknown impacts on our economy and the cost of living in California.

A recent Los Angeles Times report found that nearly every aspect of our daily lives will be more expensive because of SB32 and related climate change regulations. These experts join a growing chorus of economists, policy and industry leaders who are beginning to calculate the real costs of these new mandates.

The data they’re coming back with should concern us all. Under current regulations, we’re paying 11 cents more per gallon of gas. But when fully implemented SB32 could raise costs eight times higher than the current mandates. Economists told the Times that "gas prices ... are headed up under several very complex regulatory systems." For many Inland Empire and San Gabriel Valley residents who commute into Los Angeles and Orange County for work every day, this will put a significant dent into their monthly budgets.

One solution to that problem might be moving closer to urban areas to cut down on commute distances. Unfortunately, SB32 and other regulations will also greatly affect our housing sector. Zero-net energy and other efficiency mandates, according to the California Building Industry Association, will drive up the cost of each new house by as much as $45,000.

That means fewer people will be able to buy homes, meaning fewer will be constructed and as demand falls, there will be a likely hit to the construction sector. Well-paying, middle-class construction jobs — as many as 75,000 — could be lost when housing becomes even less affordable for the average Californian. And for families living in older, less efficient homes, they will face higher electric rates thanks to other mandates in SB32 and other climate change legislation.

Mandates on the agriculture industry will also mean higher food costs. In fact, there probably isn’t an aspect of our daily lives that won’t be affected by the state’s aggressive climate change laws and regulations. A leading economic research firm predicts that these mandates could cost each household $3,000 per year.

California is quickly becoming a state of haves and have-nots, and if we are not careful SB32 will worsen the situation. Wealthy households may be able to afford an additional $45,000 for a home or absorb $3,000 more a year for SB32 policies, but for blue-collar, middle-class families, these costs are out of reach.

That’s why an economic analysis of SB32 and existing climate change programs and regulations is so desperately needed. The Legislature has talked for years about income inequality, poverty and homelessness. Each may be intensified under these laws. Our elected officials must make sure that, while we take a major step forward in environmental policies, we don’t take a major step backwards in protecting the most hard-working and most vulnerable Californians.

By: Paul Granillo, President and CEO of the Inland Empire Economic Partnership and Jeff Allred, President and CEO of the San Gabriel Valley Economic Partnership.