Posts Tagged ‘SEM’

New California Greenhouse Gas Law: How It Will Affect California Industry

April 23rd, 2022

California has just passed a law that’s designed to lower the amount of greenhouse gas pollution the state puts out. The idea is to stop, or at least slow down, the effects of global warming. It’s a little complicated, but here are the details as I see them:
–Businesses in the state need to cut their greenhouse gas emissions back to 1990 levels by 2020.
–Industries that are traditionally heavy-polluters, like refineries, power plants, and cement makers, will be required to report on their progress in lowering emissions.
–A state agency, the California Air Resources Board, will be in charge of implementing and enforcing the new regulations.

The law is a little vague as to how the board will enforce theses regulations, and how to handle industries that cannot meet the new standards. The bill calls for “market solutions” to be used in these situations, but doesn’t detail those solutions.

What does it mean? Gov. Arnold and Dems in the legislature hail this as a chance for California to lead the country in setting hard limits on this type of pollution. Many Republicans and business people say this will cause higher prices and job losses for our state. The Competitive Enterprise Institute released a statement with my favorite headline: “California Votes to Join the Third World.”

What’s the truth? Honestly, there’s no way we can know. Both sides are driven by certain beliefs, many of which have shaky foundations. Supporters of the bill believe:
–That global warming is an absolute fact, caused largely by human pollution.
–Further, they believe that if governments put hard limits put on industrial pollution, companies will develop technology that will make those industries cleaner.
–The new technologies will result in more, better jobs, and that those jobs will offset any job losses that industry suffers.
–Supporters are also betting that the whole country will adopt hard pollution limits, so there will be no advantage in companies leaving the state.

Opponents of the bill have a whole different set of assumptions:
–They aren’t at all convinced that humans have a decisive part in global warming. Most people in this group say that if the climate is warming, it’s part of the natural cycle the earth has gone through many times.
–If the technology to make these industries cleaner does not come along, companies will need to find another way to cut pollution levels back to 1990 levels. Some companies would have to cut production, resulting in higher prices. Others would simply leave the state, with potentially thousands losing their jobs. Either of these scenarios would devastate California’s economy.
–If other states, or the nation as a whole, does not enact similar standards, the state likely will see more companies leave for states with looser pollution regulations.

Which side is right? My crystal ball is in the shop, so I can’t see the future. But both sides have legitimate points–the problem is that one of them will be proven wrong. California chose the side it thought was right, and for the sake of our economic well-being, all of us who live here have to hope they are correct.

What kind of business opportunities might come about because of this bill? Four opportunities are likely to come about in the next few years:
–Companies will come up with cleaner, more efficient processes for heavy polluters to do their business. Companies are sometimes reluctant to change their familiar, proven methods of manufacturing, but these new standards may leave them little choice.
–It seems likely that some companies will turn to alternative energy sources, and those involved in producing that energy stand to benefit.
–Manufacturers that find themselves dramatically lower their emissions could profit by selling their “clean air” credits to companies who pollute too much. The Air Resources Board will probably set up a system where heavy polluters can buy these credits from non-polluting companies. This could be a potential windfall for clean companies.
–Companies will need people who have studied the new law, and its effects, in detail. These people will profit by showing companies how to navigate the maze of new regulations that is sure to result from the new law.

The full impact of this legislation won’t be felt for several years. But California companies cannot afford to wait. The companies that will profit in the new California landscape will be those that can adapt quickly, find new ways to do things, and figure out exactly what the regulations mean to their business.