Comment Log Display

ARB Emissions Trading Program Hearing
Testimony, John Arensmeyer
Dec. 16, 2010

The enactment of the Global Warming Solutions Act, known as AB 32,
marked a milestone in California’s effort to grow the clean energy
sector of our economy. A key component of AB 32’s implementation is
the Air Resources Board’s carbon emissions trading program. This
program is needed to provide the economic opportunities AB 32
creates for small businesses, and to transition California out of
its present state and into a fiscally responsible clean energy
future. For that reason, the Air Resources Board should adopt its
proposed market system without delay.

Small businesses across our state stand to benefit greatly from the
incentives a carbon emissions trading system establishes. We know
this from an in-depth economic analysis of AB 32 we released in
October of this year. Our report, “Economic Opportunities for Small
Businesses Under AB 32,” concluded that the new law will lead to
significant economic growth from increased investment and
innovation—a boon to California small businesses and the economy
overall.  

The key findings of the report are encouraging, as small businesses
play a pivotal role in our state’s economy. In 2006, 7.2 million
Californians were employed by nearly 720,000 small businesses. Of
these firms, 88% had fewer than 20 employees. AB 32 provides
opportunities for many of these businesses to gain a financial edge
in the burgeoning clean energy sector. According to our report,
these opportunities include:

Increased investment in energy efficiency: Climate change
legislation will fuel demand for and increase investment in energy
efficiency goods and services, thus generating new prospects for
small businesses that provide them. It will boost investment in
building retrofits, new construction and renewable energy
generation—industries primarily composed of small firms that do the
majority of hiring.

Increased spending on non-energy purchases: AB 32 will reduce
spending on energy expenses and increase demand in many sectors for
goods and services, which will in turn pad small businesses
coffers. In addition, the law will help raise revenues of small
service businesses, which make up 50% of all small businesses in
the state, by $4.6 billion by 2020, and more than 15,000 jobs will
be added. Because of requirements in the law that will spur greater
fuel and energy efficiency, consumers are expected to save $2
billion annually, allowing this money to be pumped back into the
economy. For California small service business, the financial
benefit translates to an extra $1,115 per employee.

Incentives for companies to go green: AB 32 will create savings and
boost profit margins for new and existing “Main Street” small
businesses that successfully go green and employ brand
differentiation strategies to grow their businesses.
 
New innovation: AB 32 will drive innovation, as small businesses
will continue looking for opportunities to make and supply the
energy efficiency technologies needed to comply with the law’s
emissions standards. When the Clean Air Act was enacted on the
federal level decades ago, American innovation led to the creation
of catalytic converters, a product that has spurred job growth in
manufacturing and other sectors. The same type of innovation will
occur here in California. But we must make it a top priority to
address all of AB 32’s provisions, including ARB’s carbon emissions
trading program, which is key to providing Californians with
incentives to invent, build and maintain these technologies. 

The opportunities AB 32 creates for California and our small
businesses are vast. They will enable small employers to do what
they do best: create new jobs and help our struggling economy get
back on its feet. However, we need a strong market signal to
continue the investments and incentives needed to take full
advantage of the law. Since AB 32’s passage in 2006, venture
capital has been flooding into California and reached $1.4 billion
in the first two quarters of 2010 alone. The Air Resources Board’s
work on adopting a system of carbon emissions trading will help
sustain market certainty, continue this growth in investment and
move California from a carbon-based economy to a clean energy one.


California has a proud tradition of leading the nation in smart,
new policies. AB 32 is a prime example. It’s imperative we don’t
miss our chance to give small business owners the help they need
during these tough economic times, because it’s our creative
entrepreneurs who will lead the way in restoring our state’s
economic vitality.