Events & Media: AB 32 Workshop

From left: Professor Charles Kolstad, ARB Chairman Mary Nichols, CalEPA Secretary Matthew Rodriquez between sessions.

April 5, 2012

Last week, California Environmental Protection Agency (CalEPA) Secretary Matthew Rodriquez, Air Resources Board (ARB) Chairman Mary Nichols, key staffers from their offices, and 25 top economists from around the world convened at the Bren School for a two-day workshop on measuring the economic performance of AB32, California's Global Warming Solutions Act, which became law in 2006 and is being implemented now.

Hosted by Bren professor of economics Charles Kolstad and Bren professional researcher Emily Wimberger, and organized by the UC Center for Energy and Environmental Economics (housed in Bren), the workshop featured talks on the following five areas of consideration:

  • Estimating the cost to the California economy of regulations associated with implementing the law.
  • Estimating the "fairness" of the law to the many groups affected by its regulations (ie, evaluating environmental justice).
  • "Leakage," referring to competitive disadvantages that may result for various industries that compete with, say, Nevada or China, neither of which has a similar law (as well as increases in out-of-state emissions).
  • Job consequences of the law.
  • Health effects of the law.

“There are a lot of critics taking potshots at AB32, and the state realizes how important it is to get control of the economic aspects of the law as it is implemented,” said Kolstad after the workshop. “The biggest challenge of implementing AB 32 is ensuring that it’s on solid economic ground and doesn’t cause problems for the California economy.

“Reducing global CO2 is actually a secondary concern, because California is only one state and can't make much of a difference to global atmospheric carbon on its own. But in economic terms, the whole world is watching to see whether the law is a success or a failure here.”

The group will follow up the meeting by drafting a summary of ideas that were developed as well as a work plan to inform  regulators as they evaluate the economic impacts of the regulation. Kolstad suggested that the state will then likely develop a research program to facilitate developing empirical findings related to the ideas.