California Is the Wrong Energy Model for the Nation and World


California Is the Wrong Energy Model for the Nation and World

The state's policies have raised energy prices and unemployment, yet offer no climate benefits

California Gov. Jerry Brown has hailed the Golden State as a model to be followed when United Nations climate negotiators convene in Paris this year.

If my experience working for the California Energy Commission taught me anything, it’s that the California way is more a cautionary tale than a model for the world.

In 2006, California aimed to make a splash when it passed AB 32, its landmark energy law requiring greenhouse gas reductions to 1990 levels by 2020. The centerpieces of the plan are an energy mandate forcing utilities to purchase one-third of their electricity from unreliable renewable sources, and a costly and convoluted carbon cap-and-trade system.

Instead of environmental gains, the plan resulted in lost prosperity for residents in the form of soaring electricity, gasoline prices and joblessness, all among the highest in the nation. Higher prices and stagnant employment have led to, on a cost-of-living basis, California’s poverty rate being much worse than the rest of the country.

Now Brown is promoting legislation that will make things even worse, requiring that half the state’s electricity come from renewables while cutting petroleum use in vehicles by 50 percent. This new legislation would accelerate California’s trend of rising energy prices and unemployment rates, yet offering zero climate benefits.

If the Obama administration gets its way, California-style energy policies, and the harm they cause, would be spread across the country. In the coming months, the Environmental Protection Agency (EPA) is scheduled to finalize its so-called Clean Power Plan requiring states to reduce carbon dioxide emissions by 30 percent by 2030.

The EPA has called on states to submit their “own plans” to outline how they propose to adhere to the new rule. To achieve these strict reductions, states can choose only from an EPA approved set of “building blocks.”

Under threat of withheld federal dollars for everything from transportation projects to sewer treatment facilities, each state will be forced to follow California’s “lead” by imposing costly taxes, carbon trading and mandates on energy. In practice, states that succumb to the EPA’s plan will be following California’s lead into economic purgatory. Beyond quality of life concerns, there are simple reasons the California way isn’t a model for the nation.

The state is blessed with mild temperatures, so heating and cooling expenses take less of a toll there than most other places. But it still manages to have higher energy prices than most of the country due to nonsensical policies.

For the rest of the country to comply with the EPA’s Californication of the electric grid, states will be forced to switch from affordable, reliable coal and natural gas to costly, unreliable and patchy sources. NERA Economic Consulting estimates residents of 43 states would see double-digit rate hikes under the EPA rule.

The spike in energy prices will harm all Americans, particularly the poor, who spend more on energy and will thus have less to spend on basic necessities such as food and medicine, compromising their own and public health.

The EPA’s rule also subjects states to electric reliability problems. Currently, California imports much of the power it needs. Its own grid operator has warned that, with the increasing reliance on unreliable renewable resources, “the system becomes increasingly exposed to blackouts.”

The EPA is moving quickly to finalize its costly climate rule before the Paris summit. This is because, by itself, EPA’s climate regulation is purely symbolic. By EPA’s own calculations, it has a negligible impact on global temperatures.

To achieve its symbolic victory, EPA seeks to submit all states to the threat of high energy prices and a less reliable grid. Instead of surrendering to the EPA, states should do everything in their power to resist.

Tom Tanton is a senior fellow at Reason Foundation and former policy advisor at the California Energy Commission. This article originally appeared in Investor’s Business Daily.