On March 24, California’s Air Resources Board (ARB) released a new economic analysis that found that California can grow its economy while meeting air pollution reduction goals of its Global Warming Solutions Act of 2006 (AB 32).
This post is the second in a series. The first summarized ARB’s modeling methods and findings about gross state product. This one covers jobs. Subsequent ones will discuss the following topics:
- household income
- energy price "shock risk" reduction
- how CARB's work compares to other analyses
1. What is the big picture jobs impact of California’s climate policy?
ARB modeling indicates that statewide employment is going to grow dramatically during the decade leading up to 2020 whether or not the measures laid out in the AB 32 Scoping Plan are fully implemented. According to the Employment Development Department, California employment in 2009 totaled approximately 16.1 million jobs.
Total labor demand is forecasted to grow to more than 18.4 million jobs in California with or without AB 32, as shown in Figure 1. In truth, the difference in labor demand between the business as usual and AB 32 scenarios is barely visible.
Figure 1 – Gross State Economic Productivity in 2020 with and without AB 32 Implementation
2. What do the numbers suggest for specific sectors?
With a few exceptions, employment in California’s major economic sectors will look very similar with or without AB 32. Many sectors are forecasted to gain jobs thanks to AB 32, including the biggest one: services.
Others, such as mining, utilities and retail trade, may lose jobs relative to business as usual growth, but will still grow dramatically between 2010 and 2020.
Utility sector labor demand reduction is anticipated as a positive consequence of energy efficiency investments, whereas retail trade labor declines will result from less gas being sold (e.g., fewer gas station attendant jobs) once people begin driving more fuel efficient vehicles.
This is good news for the overall economy: consumers will end up with more money in their pockets because of the savings they’ll get from using less energy and fuel.
Figure 2 – Jobs by Sector in 2020 with and without AB 32 Implementation
3. Do these findings about job growth make sense?
While it might seem logical to conclude that environmental regulation will be a drag on the economy, plenty of evidence indicates the opposite is true. Environmental regulations can translate into more efficiencies that reducde costs and more competitive industries employing more people.
EDF examined the job generating potential of AB 32 in 2009. We found that employment is likely to be spurred in several sectors and their supply chains, including:
- Biofuels, particularly those used for transportation and electricity
- Construction, particularly solar installation, heating, ventilation and air conditioning contractors, as well as for new electricity generation and transmission facilities
- (Clean) Technology, particularly associated with energy efficiency, advanced materials and nanotechnology, high efficiency vehicles, photovoltaics and related software
- Environmental engineering services associated with testing and compliance
- Consumer products, particularly biodegradable packaging, plastic ware and nontoxic household cleaners
- Information technology, particularly environmental-related software
- Transportation and logistics such as fuel cells, diesel retrofits and hybrids
- Waste and water purification and conservation
EDF also found that existing public policies and economic conditions are already acting to transform the state’s economy to be more efficient and reliant on cleaner energy sources.
AB 32 measures will ultimately prompt higher energy productivity (more output per unit of energy used) from our vehicles, appliances and buildings, which will help our economy be more competitive in a global marketplace and less exposed to risks related to dependence on imported fuel (more on this last topic in a future post).
The act also calls on the state to use more renewable energy technologies, which is already creating jobs and will continue to do so. A UC Berkeley report found that renewable energy generates more jobs per unit of energy produced and per dollar of investment than the fossil fuel-based energy sector. AB 32 will also continue to draw increased energy-related research and development (R&D) investment into the state.
California is enjoying the economic productivity of more than 40,000 green jobs, a category that has grown dramatically while other employment opportunities have declined. With current statewide unemployment rates above 12 percent, the job generating potential of AB 32 is increasingly important. To put that importance into perspective, in the absence of our recent green job growth, the current statewide unemployment rate would exceed 13 percent.