Environmental Progress Does Not Kill Profit
TO ANYONE WHO believes environmental regulation is poison for profits, California must be infuriating. The state’s pollution policies rarely wilt its perennially blooming economy. For the past nine years, a Golden State-centric think tank Next 10 has been releasing its California Green Innovation Index. The results this year show a continuing trend: For two and a half decades, California’s GDP and population have continued to rise, while per capita carbon dioxide emissions have stayed flat.
But California isn't done yet. It has two major upcoming goals: reducing emission to to 1990 levels by 2020, and 40 percent below that a decade later. So while California has continued to grow during phase one of its environmental overhaul, it's still a question whether its long-term green ambitions will turn its economy as chilly as a San Francisco summer.
California has a long been on the leading edge of environmental policy. It all started because Los Angeles had such filthy air that, in 1947, after a lot of public outcry, the city formed its Air Pollution District—the first air quality agency in the US. (The US Clean Air Act didn’t pass for another 15 years!) Over the next several decades, California rolled out green building codes, efficient appliance standards, and cap and trade policies—all aimed at curbing pollution. All the while, the state made it easier for entrepreneurs to do business. This included actions like decoupling electricity sales from revenues, which forced more efficiency into the system. California also has healthy net metering caps, which allow rooftop solar panel owners sell more of their overstock electricity back into the grid.
The result of all this legislative tinkering: “California is the most energy efficient economy in the world, and least carbon intensive,” says Adam Fowler, a research manager at Beacon Economics, the firm that produced the Green Innovation Index at Next 10’s behest. And it pays. Fowler says that every $10,000 spent in California results in 55 percent less carbon dioxide than it would in the rest of the US. “We have a very clear time series showing that the decoupling of fossil fuel use from GDP is possible,” he says.