The green policies that will hurt California

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Mount Shasta in California (Pixabay)

[Editor’s note: This story originally was published by Real Clear Energy.]

By Joel Kotkin

Real Clear Energy

No state advertises its green credentials more than California. That these policies often hurt the economy, driving up housing costs and narrowing opportunities for working-class people while not even doing much for the environment, has not discouraged the state’s environmental overlords.

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Consider the state’s insistence on electrifying transportation. Even as California reduces its reliable sources of power, notably nuclear and national gas, it is mandating a statewide shift to all-electric medium- and heavy-duty trucks starting in 2024, with the goal of reaching 100 percent of all new sales, wherever feasible, by 2045. On top of other electrification mandates for light-duty cars and buildings, the new truck rule will further increase the state’s demand for electricity and raise rates, already among the nation’s highest. Since 2011, electricity prices have increased five times as fast as the national average. In 2017 alone, they increased at three times the national rate.

These policies have been devastating to poorer Californians, particularly in the less-temperate interior, where “energy poverty” has grown rapidly. Alternative energy sources like recycled natural gas and nuclear could lessen the pain, but the climate purists who dominate California policymaking find only wind and solar acceptable. Even some climate-change advocates caution that overreliance on intermittent, weather-dependent energy will push costs so high and lead to such massive land and environmental impacts that the public will turn against such policies. Time will tell.

Tragedy at the Port

The impact of forced electrification on working people, who have been rightfully praised for their critical and even heroic efforts during the pandemic can be glimpsed at California’s three major ports—Los Angeles, Long Beach, and Oakland. International trade, including exports and imports, supports nearly 5 million California jobs, nearly one in four of the state total. Yet the new electrical truck mandate will threaten the competitive advantage of these ports, and the jobs of the tens of thousands of blue-collar Californians who work at them.

Compared with very low-emission natural gas vehicles, large electric trucks are far more expensive, not yet readily available , and less capable of carrying loads for great distances, notes Weston Le Bar, CEO of the Harbor Trucking Association trade group. An electric truck, he notes, can cost four times that of a “near-zero” natural gas truck. The electric trucks can go at best 80 miles without stopping; a less expensive gas one can cover 500, greatly increasing efficiency.

Challenges including a lack of electric-charging stations, notes Jack Khudikyan, principal owner of Compton-based MDB Transportation, also make such vehicles impractical for longer hauls. He estimates the cost of running an electric truck is as much as seven times as high per mile than a near-zero vehicle.

The electric-truck mandate—California’s latest in a series of green strictures—will work to the benefit of rival ports such as Houston, which make no such demands on haulers. Over the past five years, California’s ports have lost a substantial portion of their North American container-market share, dropping from 35.5% to 30.2%, as shippers take advantage of the greater capacity of the upgraded Panama Canal to reach more user-friendly ports on the Gulf Coast. Current volume numbers are down 30% from 2018 levels.

Such losses could prove troubling in the future. Past experience shows that once supply chains are rerouted—as they have been during escalating tensions with China and the ongoing pandemic—they are notoriously hard to reverse. East Coast ports lost out to California on Pacific trade in the past, for example. And California greens shouldn’t delude themselves that the exodus to other ports will make any net difference in greenhouse-gas emissions—it will merely shift demand to new locations.

The biggest losers in California’s green port policy are minority entrepreneurs and blue-collar workers. Most of the roughly 18,000 drivers working at the Ports of Long Beach and Los Angeles are Latino, while the 4,500 in Oakland include large contingents of Indian-Americans. Some 1,800 small and sole proprietors, who dominate the trade, have little wherewithal to absorb the huge costs associated with electric trucks, forcing them out of business, in favor of larger rivals.

“Regulation like this drives consolidation,” Le Bar suggests. “One of our biggest fears is that the entrepreneurial character of the business is being destroyed…The regulators don’t care about the working class.”

The Chimera of Green Jobs

California’s green regulators maintain that ever-stricter climate rules will have only a small impact on the economy, a contention that even some environmental economists, such as Harvard’s Robert Stavins, find dubious. Eager to mitigate concerns about higher costs associated with the state’s energy policy, California political elites, including billionaire Tom Steyer, have embraced the notion of “green jobs.”

It’s mostly wishful thinking. As a recent Massachusetts Institute of Technology (MIT) report suggests, overreliance on renewables will continue to impose costs, including for massive new (and environmentally unfriendly) battery-storage capacity; it will also threaten reliability, particularly without energy from other sources, such as nuclear plants. Virtually every place that has tried to base its energy on a short-term shift to renewables—Germany, Demark, even resource-rich Australia—has experienced huge spikes in energy prices. In Europe, notes one recent study, reliance on renewables both reduces incomes and boosts rates of household poverty.

High energy prices have proved disastrous for historically well-paying working-class California jobs in manufacturing, energy, and homebuilding. As the green regime has imposed ever-stricter regulations, a recent Chapman University report suggests, the state has fallen behind in creating high-wage jobs. Since 2008, California has created five times as many low-wage as high-wage jobs. It has lost 1.6 million above-average-paying jobs in the past decade, more than twice as many as any other state.

This attrition reflects in part the torpor of the state’s industrial sector. Over the past decade, the Golden State has fallen into the bottom half of states in manufacturing-sector employment growth, ranking 44th last year; its industrial new-job creation has been negative. By contrast, competitors such as Nevada, Kentucky, Michigan, and Florida have seen gains. Even without adjusting for costs, notes The New York Times, no California metro ranks in the U.S. top ten in terms of well-paying blue-collar jobs, but four—Ventura, Los Angeles, San Jose, and San Diego—sit among the bottom ten.

“Green jobs,” meanwhile, don’t look likely to expand as many had predicted. Tesla, the state’s last big auto manufacturer and poster child for electric vehicles, has found state energy and regulatory policies too difficult to navigate. In 2014, Elon Musk chose to put his $5 billion Gigafactory in low-cost Nevada. Last week, he announced that the company’s new $1.1 billion dollar SUV plant, employing over 5,000 people, will be built even farther away, outside Austin, Texas. Other fledgling firms entering the electric space may also be unlikely to produce new-generation vehicles in the Golden State. Tesla rival Rivian plans to build its products in Illinois, while General Motors has decided to set up its new electric-truck operation in Michigan.

Negligible Gains, Tangible Pain

California’s electrical fantasy is facing some pushback, even among Democrats. In response to the state’s new drive to prevent new natural gas hookups, 113 cities and the three most prominent ethnic chambers of commerce—African-American, Latino, and Asian-Pacific—have joined the State Chamber to change the electrical mandate. Bay Area restaurateurs, who prefer to cook with gas and are already struggling with existing regulatory mandates and pressures, have sued the state. These and other independent businesses are also among those hardest-hit economically by the coronavirus; Sacramento’s electrification obsession further threatens their future.

Perhaps the most dubious aspect of the all-electric policy can be summarized in a question: Where will the new juice come from? In 2018, California used about 285 million megawatt hours of electricity, but it imported over 30 percent—90 million megawatt hours—from other locations. California is by far the nation’s largest net electrical-importing state. By 2050, state consultants estimate that electrification mandates, including those for trucks, will cause total demand to skyrocket to about 500 million megawatt hours.

The California being forged by policies such as forced electrification is dystopic—even from a conservationist perspective. To accommodate massive new solar and wind facilities will require not only sacrificing blue-collar jobs but also essentially devastating some of the state’s great natural areas, notably the Mojave Desert. Nearly 70,000 acres of habitat of the endangered desert tortoise have been destroyed. Groups like The Nature Conservancy have estimated that by 2050, with the abandonment of fossil fuels and nuclear power, in tandem with greatly increased electrical demand, wind and solar facilities alone would cover from 1.6 million to 3.1 million acres—a massive scale of new development considering that, in 2010, the Census Bureau estimated that California’s total urban, non-rural area amounted to 5.26 million acres.

To avoid the blanketing of the state’s agricultural and nature areas, the lowest-cost options for installing and operating this massive expansion of energy development require covering large amounts of land in other states with new solar and wind facilities serving California—a strategy that, even if feasible, will likely prove controversial. If California elects to build—or is forced by uncooperative neighboring states to build—its new wind and solar capacity in-state, costs and land impacts will dramatically increase.

In the end, sweeping electrification mandates can only intensify inequality in a state home to both the world’s richest corporations and the highest percentage of poor people. California already suffers the widest gap between middle- and upper-middle-income earners of any state. Its aggressive green policies seem certain to accelerate that trend. Rather than a sign of bold progressive change, the electrification mandate seems likely to consolidate further a new model of high-tech feudalism—one that will offer opportunity for powerful regulators and renewable-energy firms but impose a harsher future on most other Californians.

 

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and executive director of the Urban Reform Institute. His new book, The Coming of Neo-Feudalism, is now out from Encounter. You can follow him on Twitter @joelkotkin.

[Editor’s note: This story originally was published by Real Clear Energy.]

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