Calif.'s AB 32 fate set for November

By Luke Geiver | June 10, 2010
Posted June 25, 2010

The fate of California's Assembly Bill 32 (AB 32) will face a tough test in November. The controversial law, which requires the state to reduce greenhouse gas levels back to 1990 levels by 2020, has met opposition from many in the energy sector due to concerns both over the economic impact and the negative situation an independent state-specific approach might create. After 800,000 signed a petition to suspend the law, a move that required only 435,000, November voters will determine the future of the bill. Many in the state label AB 32 a "job killer."

"It's not the goals of AB 32 that are in question, it's the timing," said Jack Stewart, president of the California Manufacturers and Technology Association in a statement prepared for the California Jobs Initiative. Stewart's concerns stem from a California Legislative Analyst's Office (California's non-partisan fiscal and policy provider) report on the economic impact of AB 32. "We believe that the aggregate net jobs impact in the near term is likely to be negative, even after recognizing that many of the SP's (California Air Resources Board Scoping Plan) programs phase in over time," the report stated.

"As the LAO clearly indicates, implementation at this time will lead to higher energy costs and the loss of jobs and economic activity to other states and countries," Stewart added. The California Jobs Initiative estimates the bill will cost the state 1.1 million jobs, while the LAO only infers that job losses will occur and have a negative impact, citing the difficulty of equating job rates with policy change. "Given the many issues raised about their efforts to date, however, we believe that CARB's current modeling tools and their method of application are not able to provide reliable estimates of the jobs impacts on the scoping plan in 2020," the report noted.

While the economic impact AB 32 remains an issue, for ethanol producers outside the state attempting to provide ethanol options for the large population of flex fuel drivers, the LAO report also touched on the reach of the bill. "We would note that in terms of the package of actions proposed by CARB in the scoping plan, existing statues and executive orders requiring certain actions such as the low carbon fuel standard effectively constrain the way that CARB can implement AB 32." Should AB 32 be suspended by voters in the November referendum, it will add further complexity to the controversies surrounding the implementation of California's low carbon fuel standard, initiated by an executive order to help meet the AB 32 goals. CARB's modeling of indirect land use in calculating corn ethanol's carbon score would effectively discourage the sale in California of much of the current U.S. ethanol production. As California is the single largest market for gasoline in the U.S., the CARB decisions have prompted a firestorm of protests from the U.S. ethanol industry.