October 16, 2006
The Implications of AB 32 are SERIOUS.
Analysis of:
NRDC Extolls AB 32--what will it do? | www.commondreams.org
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Implications: California's economy is among the fifth largest in the world.
But its political leaders have adopted legislation that will inevitably reduce their economic rank.
You need to educate yourself who AB 32 will affect the utilty and industrial sectors of California's economy, and how you can avoid losses and in fact profit from this economy-wrenching mistake of a piece-of-legislation.
Analysis:
Unbelievably, the bill was openly championed by venture capitalists who promote alternative energy schemes, and everyone ignored the conflict of interest. Imagine if the oil companies had done such a thing--they would be skewered mercilessly in the press! But because a few of these guys have promised to donate their profits to charity (what commission will oversee THAT???), the gross conflict was glossed over and ignored. A bad law pushed by ideologically-driven, ignorant, but well-intentioned people -- using other people's money.
Thanks to this legislation, and its companion raising Renewable Portfolio Standards to 20%, you will see an enormous sum of money (so far this year $300 million) being plowed into various alternative energy projects -- which will fail just as the windmills in the Altamont have. The general populace believes that some evil force has prevented renewables from being developed, and now, because we want it and its the "right" thing to do--voila--we'll simply decree that it must be done, and it will magically appear.
Don't these people realize that, as an example, the geothermal industry has been in a 30 year slumber because of economics--not conspiracy or lack of desire? It simply costs more and is harder to find and quantify than gas-fired generation. It ain't going to happen just because we want it or ban other means--IT WILL COST US ALL MUCH MORE!
CO2 emissions (more than 80% of GHG) are only reduced by eliminating the burning of fossil fuels. Without nuclear or coal available within CA to achieve this, and the extreme amount of capital required for more efficient or energy conserving capital equipment required for fossil fuel efficiency, there can only be reduced economic activity to provide the proscribed reductions (see the study on Sweden, where the economic cost was estimated at $15 Billion). And, the neighboring states of Califonia will profit immensely as they continue to enlarge their role as the economic training wheels for the state. In fact, they will become sidecars to the state's rickety bicycle of an economy!
But its political leaders have adopted legislation that will inevitably reduce their economic rank.
You need to educate yourself who AB 32 will affect the utilty and industrial sectors of California's economy, and how you can avoid losses and in fact profit from this economy-wrenching mistake of a piece-of-legislation.
Analysis:
AB 32 was signed by the Guhvenator 9/27/06, and it has enormous implications on power generation, the primary one being that construction of new plants and the operating status of existing ones will be unclear until 2011.
The bill requires that a study by ARB is completed in 2008, that they then propose how to achieve the reductions (2009), and start implementing in phases in 2010-2012. Meanwhile, the energy and heavy industry segments who emit CO2 (such as cement makers, food dryers, auto makers, and the like) are going to put on hold every capital improvement in CA (they can't even figure out the economics to support their spending!), move production out of the state (unlike the poor utilities, who can't import coal-fired generation to replace current energy) and prepare to exit the state. The state's Gross Product will falter and the state may fall into its own recession, hopefully not dragging the rest of the country with it. Utility rates will soar (except for people like me with PV solar--my electric bill for the last six months has been $200 TOTAL) and the resulting dampened consumer demand will chop retail sales.
The bill requires that a study by ARB is completed in 2008, that they then propose how to achieve the reductions (2009), and start implementing in phases in 2010-2012. Meanwhile, the energy and heavy industry segments who emit CO2 (such as cement makers, food dryers, auto makers, and the like) are going to put on hold every capital improvement in CA (they can't even figure out the economics to support their spending!), move production out of the state (unlike the poor utilities, who can't import coal-fired generation to replace current energy) and prepare to exit the state. The state's Gross Product will falter and the state may fall into its own recession, hopefully not dragging the rest of the country with it. Utility rates will soar (except for people like me with PV solar--my electric bill for the last six months has been $200 TOTAL) and the resulting dampened consumer demand will chop retail sales.
Unbelievably, the bill was openly championed by venture capitalists who promote alternative energy schemes, and everyone ignored the conflict of interest. Imagine if the oil companies had done such a thing--they would be skewered mercilessly in the press! But because a few of these guys have promised to donate their profits to charity (what commission will oversee THAT???), the gross conflict was glossed over and ignored. A bad law pushed by ideologically-driven, ignorant, but well-intentioned people -- using other people's money.
Thanks to this legislation, and its companion raising Renewable Portfolio Standards to 20%, you will see an enormous sum of money (so far this year $300 million) being plowed into various alternative energy projects -- which will fail just as the windmills in the Altamont have. The general populace believes that some evil force has prevented renewables from being developed, and now, because we want it and its the "right" thing to do--voila--we'll simply decree that it must be done, and it will magically appear.
Don't these people realize that, as an example, the geothermal industry has been in a 30 year slumber because of economics--not conspiracy or lack of desire? It simply costs more and is harder to find and quantify than gas-fired generation. It ain't going to happen just because we want it or ban other means--IT WILL COST US ALL MUCH MORE!
CO2 emissions (more than 80% of GHG) are only reduced by eliminating the burning of fossil fuels. Without nuclear or coal available within CA to achieve this, and the extreme amount of capital required for more efficient or energy conserving capital equipment required for fossil fuel efficiency, there can only be reduced economic activity to provide the proscribed reductions (see the study on Sweden, where the economic cost was estimated at $15 Billion). And, the neighboring states of Califonia will profit immensely as they continue to enlarge their role as the economic training wheels for the state. In fact, they will become sidecars to the state's rickety bicycle of an economy!
This will be a debacle of considerable proportions, and when the governor opens the economic safety valve provided in the legislation (in October 2008 is my projection, since that is the next 4 year election year), the damage will have been done--leading to, or in the middle of, our next energy crisis in California.
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