Proposition 23 on California’s November 2 ballot would effectively kill the state’s law to reduce greenhouse gas emissions and damage the U.S. market for less polluting energy sources.
Some of the more excitable tea partiers have adopted Proposition 23 as a pet cause. Should Prop. 23 prevail at the polls though, those tea partiers might want to invite Hu Jintao to their celebration tea party and pour him the first cup. Green tea would be appropriate to symbolize the market advantage they will have just handed to China.
The argument for passing Prop. 23, so we’re told, is saving jobs. If that thing is passed, it will save jobs all right – jobs in energy technology plants that are likely to end up in China.
California is widely regarded as an economic basket case, and in many ways it is, but in clean energy investments – renewables, battery storage, smart grid, efficiency products and services, and non-petroleum fuels – California is golden.
Venture capitalists are pouring money into the state to finance those kinds of businesses. In the second quarter of 2010, for example, nearly half of the $2 billion in global clean energy investment surged into California.
In 2009, California attracted $2.1 billion in clean energy investments. That’s according to George Shultz, whom people of a certain age might remember was President Reagan’s secretary of state.
Shultz, now with the Hoover Institution, is co-chairing the campaign to defeat Proposition 23.
One reason that clean-tech moneymen have eyes for California is that the state law in question, Assembly Bill 32 – AB 32 for short – gives investors the certainty that there will be a growing market for the products they’re financing. AB 32 does that by signaling to the energy market that emitting carbon pollution in California will no longer be free.
By pulling the wings off AB 32, passing Proposition 23 would tell such investors that California doesn’t want their money. Few stay where they’re not wanted. If China wants their money – and China does – China will get it if California takes the Exit 23 off-ramp.
Venture capitalist Vinod Khosla explained: “AB 32 created markets. Prop. 23 will kill the market and the single largest source of job growth in California in the last two years.”
AB 32 is Arnold Schwarzenegger’s baby. The Terminator has been less kind about Proposition 23 and its backers: “Does anyone really believe that these (oil) companies, out of their black-oil hearts, are really spending millions and millions of dollars to protect jobs? It’s not about jobs at all. It’s about their ability to pollute and thus protect their profits,” he thundered at a Silicon Valley appearance last month.
Proposition 23 backers argue that AB 32′s requirements would leave what’s left of California’s economy a smoking ruin.
George Shultz has been around long enough to know that whenever tighter environmental standards are proposed, we hear those sorts of turgid predictions; and every time, they have fallen well short of the mark.
As Shultz wrote in a Sacramento Bee op-ed: “Every time we challenge American industries with higher standards, they meet them earlier, for less money and invent new products for export along the way.” As they did when Reagan got the Montreal Protocol ratified and chemical companies found less problematic substitutes for ozone-depleting substances.
There is no reason to think that businesses won’t rise to AB 32′s challenge. In a world where investment capital can flit across oceans, America’s competitive advantage remains its technology smarts and entrepreneurial culture.
Proposition 23 is one long meme that America can’t compete and shouldn’t try. Shultz’s counter-attack: “We do not need this defeatist initiative with its sense of pessimism and its can’t-do attitude.”
No, Mr. Secretary, we don’t need it and we shouldn’t sell out for it. Not for all the tea in China.