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A positive fiscal impact of AB 32: venture capital investment

Capitol Weekly asked the California Air Resources Board to submit a commentary for our special section on greenhouse gas. Ttwo commentaries were submitted by members of the public at CARB's request.

Last year, clean technology venture capital poured into California at an unprecedented rate. Nearly 1.8 billion dollars were invested in California companies – that’s almost a 50 percent increase over the year before. What opened the floodgates? Multiple factors but perhaps the most significant was the passage of the Global Warming Solutions Act (AB 32).

Before AB 32’s adoption, a lot of venture capital investment in clean technology – now the third largest and fastest growing category of venture capital investment – was going elsewhere. By adopting emissions caps in AB 32, California removed uncertainty over its commitment to global warming reductions, creating an economic landscape that supports investment in innovation and technology to address climate change.

By acting early, California stands to benefit. According to Clean Edge Inc., by 2017, total worldwide revenue from clean energy technologies — $77 billion in 2007 — is projected to grow to $254 billion. As a result of AB 32, California companies are now in a lead position in the race to capture this market.

But the economic impact of AB 32 is not limited to the clean technology sector. Energy efficiency represents a savings for all consumers in California. For over thirty years, California’s groundbreaking energy efficiency standards – later copied by the federal government — have saved consumers billions, helped grow our economy to one of the largest in the world and reduced greenhouse gas emissions. California consumers have lower electricity bills per capita than the rest of the nation, according to Collaborative Economics and Next Ten, a nonpartisan research organization. — and one of the country’s cleanest electric systems. According to the International Energy Agency (IEA) every $1 spent on high-efficiency electrical equipment, appliances, and buildings avoids more than $2 in spending on power plants. That is money in the pocket of the consumer, money that gets spent on goods and services in our economy.

The transition from a dirty to a clean energy economy further benefits our economy by moving dollars into communities throughout the state. In 2006, California exported $30 billion – $2,500 from every California household – to buy fossil fuels. The costs of oil have doubled since then. Implementation of AB 32 will keep more of that money here in California and because clean energy production is distributed broadly, every part of the state will share in the jobs that it creates.

The price of fossil fuels has nowhere to go but up – both for the consumer and society. AB32 is an investment in the state’s future. Any delay to the implementation of AB 32 will only increase those costs, and delay or lose the benefits of our inevitable transition to renewable energy. California is trailblazing the implementation of this landmark law, for our nation and our globe. It will not be simple or easy, but it is critical to the health of the State’s economy and the well being of present – and future – Californians.

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