To Help Bail Out Small Businesses, Regulate Global Warming?

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Hank Ryan, executive director of Small Business California, says that regulations to reduce greenhouse gas emissions are not only not the job-killers that their critics make them out to be, but actually help businesses, especially small ones, by promoting energy efficiency.

California small businesses already owe a great deal of our success to energy efficiency measures that have been instituted over the past three decades in our state. During that time period, our per capita energy usage has remained flat while the rest of the country's per capita usage went up 50 percent. Energy efficiency is the reason. It gives California small businesses a competitive edge over their counterparts in other states because while they're wasting money on inefficiency, we're spending it on employees, building a better product, advertising, and capital improvements.

His point is that Californian small businesspeople should applaud the Global Warming Solutions Act that the state adopted in 2006, which mandates some of the strictest limits on emissions in the country.  The state of California, as Ryan points out, is claiming that current regulations proposed to implement the act's limits will create 100,000 jobs and $27 billion in economic production in the state by 2020.

The problem is--we don't exactly know exactly how they plan to get there. That estimate of enormous economic bounties down the road is based on the draft scoping plan that California could implement in the next few years. At the forefront of that plan is a "regional cap-and-trade system." But the empirical evidence regarding cap-and-trade systems and how well they work to reduce emissions is very mixed thus far. The Government Accountability Office released a report a few days ago looking at the Europe's cap-and-trade system--the largest tried yet--and found that its impact on emissions is uncertain, and that "its impact on sustainable development has been limited."

I am skeptical of claims that emissions regulations can make small business more profitable for an even more fundamental reason: if that was really true, why wouldn't businesses be cutting their emissions themselves already? 

Indeed, many small businesses have found innovative ways to save energy that help their bottom lines.  Also, many entrepreneurs are making money helping others to save energy.


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