PAUL MUELLER: Newsom’s California Is Showing Us What The Green Energy Transition Looks Like — And It Isn’t Pretty

PAUL MUELLER: Newsom’s California Is Showing Us What The Green Energy Transition Looks Like — And It Isn’t Pretty

Paul Mueller on December 9, 2023

With President Biden’s advancing age — and low approval ratings — there is much speculation that California Gov. Gavin Newsom will replace him on the 2024 ballot.

Whether that comes to pass or not, there’s no doubt Newsom is a rising star in the Democratic Party and that Democrats want to adopt California policies for the entire country. That’s terrifying when you look at the critical impact of environmental policy on the Golden State’s poor economic track record.

California has long pushed the envelope when it comes to environmental regulation, whether in land-use, emissions, harmful substance disclosures, renewable energy requirements and more. The state offers a preview of where the climate agenda will take us.

Earlier this year the California legislature passed, and Governor Newsom signed, laws requiring new emissions reporting requirements for businesses with sales of over $1 billion operating in the state.

These onerous reporting requirements add to the dozens of other costly environmental regulations such as banning the sale of vehicles with internal combustion engines and requiring solar panels on all new houses. But these regulations make California a worse place to live, especially for the poor. They are not costless and the bill is coming due.

These environmental regulations make everything more expensive, from housing to electricity to food to transportation. More expensive goods and services reduce people’s living standards — particularly people with fewer resources and advantages in life.

Poverty is a significant problem in California and the state’s cost of living is 40% higher than the national average. Only Hawaii and the District of Columbia have higher costs of living.

California may be a great place to live for millionaires and billionaires, but not so much for the local car mechanic, hairdresser, public school teacher, barista, or the millions of other ordinary workers. Businesses and citizens have been leaving California as the cost of living continues to rise. Last year almost half a million more people left California for other states than vice versa.

New emissions reporting requirements pile on to the cost of doing business in California.

The new climate disclosures are more onerous than previous requirements. Many companies in California already report their direct emissions to comply with existing regulation. What makes this new legislation different, and extremely costly, is that companies must report all of their indirect emissions. They must account for how much their employees driving to work, or Amazon shipping their packages, or customers using their products, contribute to emissions.

This will not only increase the cost of doing business but also muddy the waters of environmental transparency. Many of these indirect emissions are speculative, difficult or even impossible to quantify. Speculation opens the door to manipulation of reporting and to lawsuits being filed based on questionable data.

None of that is good for ordinary Californians.

Massive tech companies like Apple and Salesforce, and their highly paid employees, can shoulder these costs better than small and midsized businesses and middle class citizens. Huge companies can spread tens or hundreds of millions of dollars of additional cost across the company. Larger companies are also more likely to track most of this information already and so will not be as burdened by these new reporting requirements as their smaller competitors.

While the prices of gasoline, electricity, eggs, or cars may not matter much to tech employees and high-level government officials and bureaucrats who make hundreds of thousands of dollars a year, or to Silicon Valley executives, venture capitalists, and entrepreneurs who make millions of dollars a year, they matter a lot to tens of millions of middle- and lower-income families.

Politicians in California want to lead the way on environmental policy. They should consider how to lead the way on making such policy sustainable, efficient, and cost-effective too. Otherwise, they risk driving their sky-high cost of living even higher. That’s not equitable, fair, or just.

After all, what good is a cleaner environment if only the wealthy can afford to enjoy it?

Paul Mueller, PhD, is a Senior Research Fellow at the American Institute for Economic Research.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.