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California energy policy impacts manufacturing jobs

Posted by Gino DiCaro, VP, Communications on Sept. 4, 2014

This week, Chris Busch, the Director of Research at Energy Innovation: Policy and Technology LLC wrote a piece that appeared in both LiveScience and Essentially the piece praised California's bold energy policies and claimed that our state's economy is flourishing because of them.  Of specific note was a chart that showed our employment growth and a timeline of a few of California's energy requirements. Those policies include the Low Carbon Fuel Standard, the 33 percent renewable power mandate, the state's carbon cap-and-trade system, and California's building energy performance standards.

The chart compared California's total employment growth since December 2009 to that of the United States. In aggregate numbers we are in fact outpacing the country. But what types of jobs are we growing? We know from a chart we did a few weeks ago that most of our growth is coming from sectors that pay less. This week we charted the same dates and numbers as Mr. Busch but added a percentage growth for California's manufacturing job growth vs. the U.S.

The results show a large deficiency in manufacturing in California.  At an average $77,000 salary and tremendous ripple effects in the economy, can we afford to ignore such a deficiency? What state revenues are we losing out on by not keeping pace with national manufacturing growth? California's energy policies drive some of the highest industrial electricity rates in the country. Those costs will discourage manufacturers from choosing to invest in California, especially those looking to invest, re-shore, or scale up somewhere in the U.S.

Before concluding that California energy policies do not hurt jobs, we suggest that Mr. Busch and others account for the quality, as well as the quantity, of jobs we are losing and gaining in the state.


Chris Busch's chart 

Carbon Info chart on jobs


CMTA's chart with manufacturing:

CHART - US jobs and mfg vs CA jobs and mfg


* We used the same data source as Mr. Busch but we didn't include government in our total employment numbers, which might be why our percentages for "private sector" jobs are higher than their "total employment".

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Energy: We agree with Environmental Defense Fund -- Understand costs and benefits

Posted by Gino DiCaro, VP, Communications on Oct. 18, 2013

Affordable and reliable energy is essential to California's economy and the prosperity of our workers. Manufacturers are leading the way in investing in energy efficiency and new energy sources to help us meet future energy demands. 

California manufacturers already pay 50 percent higher industrial electricity rates over the rest of the country.  Because of a wide range of new energy policies, those rates are increasing for not just us but the rest of the different rate classes from top to bottom.  Even our poorest will pay in both higher energy costs, as well as fewer job opportunities.  It's not too late to fix this.

It's not just electricity costs of course.  All of our energy needs will be more expensive over the coming months and years.  The total bill is unknown.  The true environmental benefits are not exact.  

California can do this though.  We simply need thorough analysis so we know which policies provide the biggest benefit for the least cost.  This will allow us to prioritize and implement a statewide energy policy that grows our economy, meets our energy goals, and drives our environmental leadership throughout the country.

This is why the Californians for Affordable and Reliable Energy coalition took the time this week to pen the following excellent blog response to the Environmental Defense Fund (EDF) reaction to a preliminary CARE and Navigant Consulting cost assessment study.  We agree with CARE and EDF!  California needs more analysis to ensure our energy cost effectiveness.


Californians for Affordable and Reliable Energy’s (CARE) blog on Environmental Defense Fund Policy Paper

Yesterday, the Environmental Defense Fund (EDF) released a critique of Navigant Consulting’s whitepaper, “Preliminary Assessment of Regulatory Cost Drivers in California’s Energy Market.” The CARE Coalition (Californians for Affordable and Reliable Energy) agrees with EDF’s assessment that the Legislature and state agencies must carefully examine the benefits and costs of our state’s energy programs. But CARE would assert there is a void of information regarding the extent of state program impacts, and we believe that additional information is crucial in order for California legislators and regulators to adequately consider implementation of current programs and adoption of any new energy related mandates.

The CARE Coalition is focused on educating Californians about the energy challenges ahead as they relate to protecting an affordable and reliable supply of fuels and electricity. The California Department of Finance recently reported that unemployment increased for the second month in a row to a level of 8.9%, widening the gap with the U.S. unemployment rate of 7.3%.  At the same time that unemployment is increasing around the state, communities are being informed about increases in energy costs. The CARE Coalition believes that a full investigation of the state’s energy programs is necessary to understand the relationship between job creation and economic growth and rising energy costs.

Another aspect of energy policy that deserves careful examination is to assess the cumulative impact of the broad range of regulatory programs currently being implemented. The groundbreaking nature of many of these programs provides a compelling reason to not only assess the impact of a particular program, but more importantly, determine the impact of all the programs collectively to California consumers and economy.

The Navigant whitepaper encouraged more analysis and an understanding of existing state policies.  We highly recommend that the Legislature and state agencies offer more clarity on the obligations of California ratepayers and taxpayers as existing programs are implemented in the coming months and years. CARE believes that there will be significant impacts on California energy users that cannot be avoided without a coherent strategy that organizes and prioritizes energy actions ahead.

“Californians are informed about the state's march towards being an environmental trailblazer. Unfortunately, they are uninformed about the associated costs that will be triggered across our economy. Navigant Consulting’s whitepaper brought to light significant questions about cost impacts and potential unintended consequences.  We encourage the state to do a more comprehensive evaluation in order to design a comprehensive energy policy that is consistent with the Governor’s desire to encourage business investment and create jobs” said Rob Lapsley, President, California Business Roundtable.

As a part of our mission to educate, CARE contracted with Navigant Consulting to provide information regarding cost and reliability impacts on consumers as a result of energy policies and mandates.  Navigant and its legacy companies have worked on energy market issues for over 30 years, and in all aspects of the utility planning, operations, and legislative and regulatory compliance, providing Navigant with a comprehensive understanding of the interplay of key market issues and drivers that impact the energy industry. Navigant’s whitepaper relies primarily on previous public reports, studies and statements by California and Federal regulatory bodies for its references including: the California Energy Commission, the California Public Utilities Commission, the California Air Resources Board, the California Independent System Operator, and the Energy Information Administration among others.   

Navigant’s whitepaper warns policymakers and stakeholders that “The cumulative effect on energy costs (electricity and transportation fuels) is only beginning to be understood by those most affected, which speaks to the need for a more informed dialogue.”CARE believes this dialogue is worth having if we truly care about protecting business investment and job creation in the state.  Energy costs and certainty are a major factor for businesses of all sizes that should not be underestimated in the state’s energy planning process.

 The Navigant whitepaper clearly articulates that it is examining the costs and is not a cost/benefit evaluation of recently passed policies and regulations.  It makes clear that the purpose was not to examine already well-documented environmental and related benefits that have been outlined in other studies.  Instead the whitepaper calls for a more detailed and comprehensive review of the cumulative impacts of a much larger list of policies and regulations than just the three examples examined in the whitepaper.

As cost increases are appearing in communities across the state for both fuel and electricity bills, consumers and business groups are asking questions about this trend and wondering what they are facing down the road. We hope the state takes these questions seriously and begins a process to evaluate energy policy impacts and provide more informative analysis regarding what businesses and consumers should expect as a result of California’s energy programs.


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California's clean energy drive will increase prices

Posted by Gino DiCaro, VP, Communications on Aug. 20, 2013

California is a national leader in pushing renewable energy, lower greenhouse gas emissions and energy efficiency.  State manufacturers have contributed to the effort by installing cost-effective technologies and instituting lean manufacturing processes to reduce their demand for electricity, natural gas and transportation fuels.

No other state’s manufacturers have done as much. But with more climate and energy policies being proposed every day, it’s time to take stock of where we are and where we are headed.    

If California wants to be a model for others to follow, energy supplies must be both affordable and reliable to support a massive state economy that includes manufacturing and exporting products.

Successful California manufacturers -- who employ 1.3 million workers at an average $74,000 salary – depend on priced and reliable energy to operate in this state. They need to stay competitive with manufacturers around the country and the world.

Yesterday a group including CMTA, the Little Hoover Commission, the California Small Business Association, the California Business Roundtable, and others gathered to discuss the uncertain costs of California's programs on everyone who pays for electricity, powers a vehicle, or purchases a product in the state.

“There is not a single, credible source of analysis and data that can inform companies and policymakers regarding the cumulative costs of California’s recent energy-related policies,” said Patrick Mealoy of the Navigant Consulting group.  Navigant had examined key cost drivers of three prominent California-only energy programs -- the 33 percent renewable power requirement, the carbon cap and trade auction, and the low carbon fuel standard.

Navigant’s analysis showed that the industrial community alone has dropped 17 percent of its electricity demand over the last two decades.  At the same time, the residential and commercial class grew their demand by about 30 percent.   In part, this means that industry is already lean and spent lots of money retrofitting facilities and finding efficiencies so they could compete with the rest of the country.  Any new efficiencies could be expensive and either raise the cost of goods or cause the loss of jobs in the California economy. 

This month, electricity ratepayers, including manufacturers, will see their first big rate increase due partly from the 33 percent renewable power requirement.  On average it will be a two-digit percentage hike for ratepayers in the Southern California Edison territory.  Industrial electricity rates are already approximately 50 percent higher than the nation. Estimates are far higher than cost of living increases into the future.

Job loss and high energy prices will be unintended consequences of our complex and overlapping clean energy goals.  To avoid this outcome, lawmakers should require robust cost-benefit analysis to show how regulations can be reformed to achieve reasonable goals at the lowest possible costs.    

The Little Hoover Commission might have said it best at the event, “what California really needs is a ‘timeout’ on new energy mandates.”  A timeout so we fully understand what we are getting into can only help make California’s exclusivity a trailblazing success for us and others.

Most of the participants at Monday’s event were part of the simultaneous launch of the Californians for Affordable & Reliable Energy coalition (CARE) – a growing group of companies and trade associations to raise awareness about California’s escalating energy costs. List here  |  Join  here.



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A little "sunshine" on California global warming efforts

Posted by Gino DiCaro, VP, Communications on Aug. 21, 2008

Sunshine #1 -- Petroleum industry warns botched Low Carbon Fuels Standard could threaten fuel supply
In a strongly worded letter to Gov. Schwarzenegger, the petroleum industry yesterday warned that failure to properly implement a Low Carbon Fuel Standard could result in a fuel supply crisis similar to the electricity crisis of 2001.

View Letter

Sunshine # 2 -- Poll: Consumers support greenhouse gas laws if it costs nothing
Today the AB 32 Implementation Group released a survey that polled consumers' attitudes toward the implementation of the California-only greenhouse gas law.  The poll found that while voters initially support its goals, that support dips sharply when they consider the measure’s price tag of billions of dollars in extra costs for electricity, gasoline, and food, as well as higher taxes and fees. 

View Release and Poll

Sunshine # 3 -- Fuzzy goals on 33% Renewable Portfolio Standard
Recently, the California Public Utilities Commission released a report highlighting the difficulties of reaching a proposed 33% RPS and the conflicting impacts from the competing goals of the standard.

This from the report:
California must be clear about the goal of a 33% RPS – whether it is to promote broad environmental and economic development benefits of renewables, to "move the renewables market", to reduce greenhouse gases, or some combination thereof.  If the main driver of a 33% RPS is reduction of greenhouse gases, the state must consider the GHG impact of the transmission development and the possible fossil resources needed to integrate such a large build-out of renewable generation.  California would then want to choose the most cost  effective resources for meeting its GHG reduction measures, whether in-state or out-of state renewables, demand response, energy efficiency, fossil repowers, or other options.  An integrated approach to procurement and transmission planning can best consider the costs and benefits of these options.  
View Report

One sidenote: 
This week, the Center for Energy Efficiency and Renewable Technologies released a study on the effects of reaching a California 33% renewable portfolio standard.  The report said it would result in 200,000 new manufacturing jobs and as much as $60 billion to the State's economy.   We appreciate their concern for the economy but I'm not sure passing one of the costliest and most unrealistic mandates in California's history and then calling it economic activity will help competitiveness here in the Goldish-Green State. 


And because this blog always needs to underscore the impacts on, the benefits from and the importance of manufacturing, you can read the following past blogs on global warming policies and their affect on California manufacturing:

A Gold Medal for Sen. Christine Kehoe -- August 15
Why not California #4 (&AB 32) -- August 6
Infrastructure and energy costs permeate energy conference -- August 4
California global warming solution: Additional item for a $1 or $100? -- August 1
Green building: A step toward more energy supply -- July 18
$20 billion budget abyss should trigger pause in bold, California-only policy -- April 29
Low Carbon Gas: Break new ground, not our wallets -- April 16
Greenhouse gas credits & reductions: On Sale! -- March 25
Climate change causes some to rethink nuclear power -- Dec. 10, 2007
California's competitiveness improves....a little -- Sept. 5, 2007
Report says carbon reductions will cost $100 to $500 billion -- July 17, 2007
California Steel announces major expansion -- June 6, 2007

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Low Carbon Gas: Break new ground, not our wallets

Posted by Gino DiCaro, VP, Communications on April 16, 2008

The California Air Resources Board is tasked with charting how California improves its already-cleanest gasoline by implementing the State's new Low Carbon Fuel Standard (LCFS) -- part of the State's plan to reduce greenhouse gas emissions by 10 million to 20 million metric tons by 2020.  There is so much we don't know about the life-cycle impacts of lower carbon alternatives such as bio fuels, hydrogen, clean diesel fuels and others.  Put simply, if these regulations are done poorly and without a full understanding, there will be significant risks to affordable supply, potential loss of actual emission reductions, increases in food costs and other unknown implications.

The biggest threat to getting the LCFS right (as well as all of the other regulations being implemented under California's Climate Change Law) is time constraints.   DEADLINES MUST NOT DICTATE OR RUSH THE IMPLEMENTATION OF THESE RULES OR FUEL SELECTIONS.  We're already at the forefront with a California-only climate change law so the uncertainties and questions of such complex regulations should be our sole interest.  The Air Board, with the only real manpower for such an undertaking, must take all the time it needs to understand life cycle impacts from these fuels and allow for corrections once the regulations are made.

Read CMTA President Jack Stewart's LCFS opinion placed in April 12 Sacramento Bee.

Read the AB 32 Implementation Group's LCFS letter to CARB

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