Earlier this year, California raked in $2.7 trillion gross state product, overtaking the UK as the world’s fifth largest economy — only Germany, Japan, China and the US itself produce more annually. It isn’t just our lush farming regions or the technological wonders coming out of Silicon Valley that have made California an economic bellwether, the state’s strict adherence to environmental regulations, which go far and above what the rest of the nation demands, have certainly helped as well.
California has long been on the leading edge of environmental regulation. The state created its first Air Pollution District way back in 1947, a decade and a half before the passage of the US Clean Air Act, in response to public outcry over the air quality in Los Angeles.
The benefits of these environmental regulations are well-documented. For the past 25 years, the state’s GDP and population have steadily increased while per capita carbon dioxide emission rates have remained static. Since 2006, when the state passed its California Global Warming Solutions Act, per capita GDP has increased by $5,000 (nearly double the national average) and job growth has outpaced the rest of the nation by 27 percent while its per capita CO2 emissions dropped 12 percent, according to the annual California Green Innovation Index from California-based think tank, Next10.
“GDP growth in California has outpaced the US as a whole in recent years,” Meredith Fowlie, a professor of economics at University of California Berkeley, told NBC News in 2017. “Over this same time period, the state has implemented the most ambitious climate change policies in the nation. And CO2 emissions in the state have fallen.”
And it’s not just the air we breath but also the structures we live and work in, that have also benefited from environmental regulation. While the state has only just recently proposed requiring new homes to come equipped with solar panels, California has been dictating environmentally-conscientious building codes for decades.
In 1978, California implemented a series of radical and far-reaching changes to its residential building codes that would gradually become more strict over time. The aim was “to reduce the electricity and gas now used in typical new buildings by at least 80 percent for new buildings constructed after 1990,” per the California Energy Commission’s 1979 biennial report.
Compared to pre-code houses, the modern California home uses 75 percent less power. Taken together, statewide household energy savings since 1978 run equivalent to the output of seven 500 MW gas-fired plants. Overall, the state’s per capita energy use has remained flat since the 1970s despite its economy growing a whopping 80 percent over the same period.
“When you increase energy efficiency and clean energy, what are you doing you spending less on energy and more on jobs to install and retrofit existing buildings,” Pierre DelForge, Director of High Tech Sector Energy Efficiency, Energy & Transportation program at the Natural Resource Defense Council, told Engadget. “So this is actually reinvesting in the local economy.”
Even during the bad times after the 2008 recession hit, California lawmakers ignored calls to gut the protections in the name of economic growth and instead established the state’s greenhouse gas emissions cap-and-trade program — the only one of its kind in the nation — which in 2016 cleared $2.5 billion in revenue from emission permits.
Interestingly, the 2008 recession and its fallout had an unexpected effect on the California economy, one which helped establish the state’s modern “green economy.”
“Blue collar industries initially left the state rather than stay in place, the pollution caused by those industries also left the state,” William Fulton, director of the Kinder Institute for Urban Research at Rice University who served as the planning director for the City of San Diego told NBC News. “But the economy then shaped around that kind of aftermath, and there was growth in other areas like the green industry.”
Today, green sector jobs outnumber those in the fossil fuel industry 8.5 to one. California has 300,000 jobs in green energy, more than double the 146,000 offered in Texas, the next largest employer in that industry.
“California is the most energy efficient economy in the world, and least carbon intensive,” Adam Fowler, a research manager at Beacon Economics, told Wired in 2017. “We have a very clear time series showing that the decoupling of fossil fuel use from GDP is possible.”
However, California’s aggressive carbon cutting programs could soon face an economic backlash. Last year, Stanford University energy economist Danny Cullenward released a study arguing that, should California continue to tighten carbon emission restrictions, it could price fossil fuel companies out of the state through exhorbitant operational costs. This, he asserts, could cause gas prices to skyrocket and potentially cause the environmental programs to lose public and political support. While the state looks to be on track to hit its 2020 carbon reduction goals, to actually hit the recently enacted 40 percent additional cut by 2030 could force California lawmakers into a legislative corner.
Luckily, there are already a number of potential solutions being discussed in the Capitol should that happen — everything from accelerating the development and deployment of renewable energy infrastructure to extending the cap-and-trade program to allowing regional power grids to share renewably produced energy across state lines.
“We’ve already decided as a state and as a Legislature that we want to dramatically reduce pollution and move forward toward a clean energy future,” Kevin de León told the LA Times. “That debate is over. Now we’re deciding how to get there.”
That decision will not likely involve any input from the federal government as many of these regulations run counter to the public positions of both Scott Pruitt’s EPA and the Trump administration.
In fact, in February of last year, Senate President Pro Tem Kevin de León raspberried the administration when he announced legislation that would ensure existing federal rules on air quality, water protection, endangered species and worker safety enacted prior to the start of the Trump administration would remain enforceable within the state, regardless of whether they were rolled back nationally.
“California can’t afford to go back to the days of unregulated pollution,” De León told an assembly of reporters during a press conference. “We’re not going to let this administration or any other undermine our progress.” The California legislature attempted a similar gamble back in 2003, during the George W Bush administration, when it sought to maintain existing standards for power plants while the Feds were relaxing regulations.
Then again in March of 2017, the California Air Resources Board voted to increase the fuel efficiency standards of gas and hybrid-electric vehicles in the state, just as the EPA was touting a nationwide rollback of those same regulations. Established in 2012, the fuel efficiency rules demand that vehicles hit 54.5 MPG by 2025. The Trump administration has tried to lower that standard.
“All of the evidence — call it science, call it economics — shows that if anything, these standards should be even more aggressive,” board member Daniel Sperling told the New York Times.
What’s more, this past April, California Attorney General Xavier Becerra announced that is office is bringing suit against the EPA over its reportedly illegal rollback of the “Once In, Always In” policy. This policy required the state’s leading producers of air pollution, those that produce more than 10 tons of a single pollutant or 25 tons of mixed emissions (think, oil refineries), to take permanent steps to reduce their emissions.
“Instead of prioritizing the health of hard working Americans, EPA Administrator Scott Pruitt wants to let major polluters off the hook. That is unconscionable, and it is illegal,” Becerra said in a statement. “If the ‘Once In, Always In’ policy is rescinded, children in California and around the country -– particularly those who must live near the polluting plant or factory — may grow up in an environment with tons of additional hazardous pollutants in the air they breathe. California will not allow that to happen. The EPA must be held accountable.”
These legal challenges are still before the courts but have already garnered support from a handful of other similarly-minded states. “A lot of small steps create big momentum,” said Lauren Navarro, a senior policy manager at the Environmental Defense Fund, told the LA Times. “These are pieces of what it takes to get to a clean-energy economy.”
Colombian election to decide future of economy, peace deal
BOGOTA (Reuters) – Colombia’s presidential election on Sunday will decide the future of peace with Marxist rebels and the nation’s economic model as candidates from across the political spectrum compete with promises of jobs, safer streets and a crackdown on graft.
Right-wing contender Ivan Duque, a protégé of former President Alvaro Uribe, has long been polling ahead of five other candidates with about 40 percent of the vote.
Running second with about 30 percent is leftist former M19 rebel Gustavo Petro, a combative populist who has galvanized support from millions of young people fed up with Colombia’s right-wing status quo.
If no candidate gets over 50 percent, the top two will go to a second round on June 17. Unreliable polls mean centrist Sergio Fajardo and center-right German Vargas may have a shot.
At stake is whether Latin America’s fourth-largest economy will abandon its traditionally market-friendly posture, as well as the future of the peace deal with Revolutionary Armed Forces of Colombia (FARC) rebels.
Campaigning has been marked by candidates’ accusations that their rivals will either collapse the economy or force Colombia back to the battlefield.
“These elections are among the most important we’ve lived since we’ve had a political consciousness,” said Jorge Valderrama, who manages Colombia, Central America and the Caribbean for head of BNP Paribas. “The country’s model is going to be decided.”
Business-friendly Duque has promised to overhaul the peace accord signed in 2016 with the FARC, appealing to those who say the deal was too lenient and want former guerrilla commanders jailed for crimes committed during their half-century insurgency.
Duque also pledges to reduce corporate taxes, exempt capital goods imports and support the development of oil and mining projects to help reinvigorate growth.
Petro, by contrast, has promised a complete overhaul of the economy to take power away from the social and political elites he says have dominated Colombia too long. His tax changes would raise duties on dividends, eliminate loopholes and hike charges on unproductive land.
Investors have expressed worries about Petro’s plans to spend big on education and healthcare and eliminate extractive industries. Colombia’s top exports are oil and coal.
“Petro is a grave danger,” said Bertha Infante de Garavito, 80, a residential building manager in Bogota, who fears his policies could drag Colombia into the kind of economic crisis seen in neighboring, socialist-run Venezuela. “The exact same thing will happen to us.”
LACK OF EXPERIENCE
Though he was never a combatant, Petro belonged to the M19 urban rebel group, which demobilized in 1990. He has often been hailed as an example of how ex-rebels can successfully transition to peaceful politics.
But he has also been slammed for poor management while mayor of Bogota. He was ousted from office for allowing garbage to pile on the streets for days.
Given that, Fajardo may be able to win enough support from centrists who dislike Petro to reach the second round. Vargas is backed by two strong party machines and incumbent President Juan Manuel Santos, which may yet turn out significant numbers of voters for him.
The peace deal, which won Santos a Nobel Peace Prize, saw thousands of guerrilla fighters hand over their weapons and join a reintegration process.
But Vargas has an abrasive public image and a lack of charisma that puts off many voters.
Duque, 41, is seen as more personable but has been dismissed by many as too young and inexperienced to run a nation of 50 million people with a struggling $324 billion economy.
A one-term senator, Duque worked at the Inter-American Development Bank in Washington until 2014, when Uribe asked him to return to Colombia and take a seat in Congress.
Analysts worry his tax cuts could create a revenue gap and some believe he will be heavily influenced by Uribe, known for his harsh offensives against the FARC and presiding over a buoyant economy during his 2002-2010 administration.
Petro supports the peace deal, as do Fajardo and Vargas.
Duque will have an easier time with Congress if elected – following congressional elections in March, his Democratic Center party has more Senate seats than any other and is in second place in the lower house. Petro’s party has only six seats in Congress and he would face an uphill battle to pass legislation.
Graphic tmsnrt.rs/2rAQ4l1 on elections in Latin America
Reporting by Helen Murphy and Julia Symmes Cobb, Additional reporting by Steven Grattan and Nelson Bocanegra; Editing by Daniel Flynn and Rosalba O’Brien
UK economy barely growing amid mounting Brexit concerns
LONDON—A day after the Bank of England’s governor warned about the damaging consequences of a “disorderly” Brexit, official figures Friday confirmed that the British economy barely grew in the first three months of the year.
The Office for National Statistics said the economy expanded by a quarterly rate of just 0.1 per cent amid weak household spending and business investment. Both have been held by factors directly related to the country’s vote to leave the European Union.
Household spending, which rose just 0.2 per cent in the first quarter, has been held back by the inflation stoked by the pound’s sharp fall in the aftermath of the Brexit vote, which led to a rise in the cost of imports.
Meanwhile, business investment fell by 0.2 per cent, with executives seemingly cautious amid uncertainty over Britain’s future relationship with the EU, its biggest trading partner. With firms’ balance sheets healthier than they have been for years and with the global economy — in particular Europe — doing better than expected, business investment should be rising.
For those wishing to blame the low growth on late winter weather, the statistics agency noted that the impact was fairly minimal. It said bad weather had some impact on the economy, particularly in construction and retail, but that its overall effect was limited.
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The low growth was one of two main reasons why the Bank of England did not raise its main interest rate by a quarter-point this month to 0.75 per cent, as it had earlier signalled it would. The other was that inflation had come down more sharply than anticipated.
The latest growth figures come a day after Bank of England Governor Mark Carney warned that a “disorderly” Brexit could push the bank into the same sort of exceptional stimulus it unleashed after the country voted to leave the EU two years ago. Then, the bank’s Monetary Policy Committee cut its main rate to a record low of 0.25 per cent and enacted some further stimulus measures to shore up confidence.
Amid signs that the British government’s Brexit negotiations with the EU are making little headway and could in fact be deteriorating, Carney told an audience of economists late Thursday that a “sharper” Brexit may lead policymakers to pursue a similar response.
“For example, if the transition were disorderly, or the end state agreement materially worse than the average potential outcome, then the MPC could once again be confronted by a trade-off between the speed with which it returns inflation to target and the support policy provides to jobs and activity,” he said.
“On this path, the MPC can be expected to set policy to manage any trade-off using the framework it applied following the referendum.”
Though acknowledging that the Brexit vote has already hurt the economy by raising inflation and hindering investment, the bank has operated on the assumption that the transition to a new trading relationship with the EU would be smooth.
That gave it room to raise its main rate in November to 0.5 per cent, its first hike in a decade, even though economic growth has slowed noticeably.
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With the British government split over several issues related to Brexit and Prime Minister Theresa May losing a series of votes in Parliament, there’s growing concern that there won’t be a deal by the fall. That means the country could end up crashing out of the EU next year without a deal that would, among other things, see tariffs slapped on British exports.
The aim of the Brexit discussions was to get a political deal by about October to give individual EU parliaments’ the time to approve the agreement before the official Brexit date of March 29, 2019. After that, Britain would remain in the tariff-free and frictionless European single market and customs union until the end of 2020 to smooth the process — but that transition period depends on a broad agreement being reached.
On Thursday, the cross-party Commons Exiting the European Union Committee said it was “highly unsatisfactory” the government had yet to agree on the post-Brexit trading and customs arrangements and that the country may have to stay in the customs union for years after Brexit.
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