In a heated and polarizing election year, with economic concerns weighing heavily on voters, Proposition 23 was one of the key barometers of the many initiatives on the California ballot. Ultimately defeated, Proposition 23 did not look to California voters like the right way out of our unemployment problems because it appeared more likely to stifle innovation than preserve jobs. However, despite the measure’s defeat, California’s leaders should learn the lesson that environmental regulation must be balanced against economic impacts to large and small businesses.
Proposition 23 proposed to delay the implementation of AB 32, the state’s broad mandate to reduce greenhouse gas emissions, until the statewide unemployment rate drops to 5.5 percent for a full year. Proponents argued that the proposition was necessary to avoid economic disaster; opponents claimed its passage would have doomed California’s growing clean technology industry.
The answer is no doubt somewhere between these two extremes, but on balance, voters ultimately decided that the proposition was a bad deal for California. As we lawyers like to say, “Bad facts make bad law”; the proposition seemed to many voters like sacrificing long-term growth to reduce some short-term pain.
Lawyerly disclaimer – I am not an economist, not that economists could agree about the financial consequences of either Proposition 23 or AB 32. I suspect that Proposition 23’s proponents were right that California’s greenhouse-gas reduction initiatives will result in some job losses. Environmental regulations, like other legislative programs, do have real-world impacts on businesses. Our government officials must give serious consideration to those economic impacts every time they act, regardless of the state’s economic health at that moment in time. Nonetheless, there is a cost to change, and legislation does create winners and losers.
Proposition 23’s proponents also argued that California cannot solve global climate change by acting on its own. They point out that California produces roughly 1.5 percent of the world’s greenhouse gas emissions; by contrast, China produces 22.3 percent, and the emissions from developing nations continue to rise. These statistics are important – but not the whole story.
California has long stood out as an environmental leader, ahead of the rest of the world in seeking to protect our natural resources, and imposing the most stringent regulations to achieve those goals. While these regulations impose added costs on California businesses and citizens, they also foster innovation and development of new technologies to meet those challenges. It is not a coincidence that the world’s leading clean technology centers are located in the most constrained regulatory environment. Challenges force the creation of new solutions.
The clean technology industry is one of the few growth industries in California over the last few years. Since 2005, “green” jobs have grown at 10 times the rate of other California jobs. Los Angeles is currently engaged in a multifaceted effort to create a Clean Technology Corridor, using land occupied by outdated industrial facilities to attract these new green jobs. Silicon Valley and our world-class educational institutions play a major role in supporting that sector. Our natural environment is also a major attraction, especially in Southern California, with enormous potential for developing solar, wind and other renewable energy sources.
Damaging perception
Though perhaps unintended, the worst consequence of adopting Proposition 23 would have been to create a perception that California no longer welcomes innovation by the clean technology industry. While our current infrastructure system remains heavily reliant on greenhouse gas-creating fossil fuels, few believe that system can continue to function unchanged over the long term.
New energy sources and technologies will be developed to meet those constraints – the important question is whether that innovation occurs in California or in a competing state or nation. California’s greenhouse-gas reduction mandate is a catalyst for new clean technologies and energy sources. To ease the burden on business created by that environmental mandate, California’s leaders should be focused on using its greenhouse gas regulations as a magnet to attract new clean technology jobs.
By suspending AB 32, Proposition 23 would have stifled the incentives to continue to develop new clean technologies. California voters decided that preservation of existing jobs is a worthy goal, but not at the cost of inhibiting the growth of new jobs.
However, even in failure, Proposition 23 should teach us a lesson: California must ensure that the implementation of AB 32 takes into account the impacts of the new environmental regulations on businesses big and small, old and new. That is no simple task, but it is critical if California is to successfully balance the competing goals of protection of the natural environment with ensuring our economic prosperity.
Shiraz D. Tangri is a partner in the environmental and land development group of the Alston + Bird law firm in downtown Los Angeles.
