Defending the "green guinea pig"

Defending the "green guinea pig"

Posted on

Thu, 11/03/2011 - 3:35pm

The Wall Street Journal lambasted California for its climate policies this week, just a day before the Los Angeles Times reported that "Clean-tech venture funding jumps as other sectors go wanting," with Californhia the overwhelming leader.  Did WSJ miss the link between California's environmental leadership and its clean-tech industry leadership, or more specifically the ability of California's climate regulations to help spur innovations in clean energy and other sectors?

In response to the WSJ article Matthew Kahn (Luskin Center Scholar and UCLA professor in the Institute of the Environment and Sustainability, Department of Economics and Department of Public Policy) defended California's role as a "green guinea pig" in the Christian Science Monitor. Specifically, Kahn admonishes "Don't make fun of California's carbon reduction efforts."

Yes, there will be both costs and benefits, winners and losers in carbon reduction efforts administered by deciated public servants at the California Air Resources Board. But making an important point, Kahn states that "the Air Resources Board is aware of the general equilibrium impacts of its policies.   The ARB is trying to change "the rules of the game" to get California polluters to expect that they will be charged a gradually higher price for carbon emissions.  As these polluters update their capital stock and make investment decisions (and given this policy path expectation), they will make choices that allow them to adapt smoothly to the new incentives.... The leaders of the ARB are well aware of the political realities they face.  There is no free lunch but it is possible to identify "win-wins" that internalize externalities."

 

 

The Wall Street Journal lambasted California for its climate policies this week, just a day before the Los Angeles Times reported that "Clean-tech venture funding jumps as other sectors go wanting," with Californhia the overwhelming leader.  Did WSJ miss the link between California's environmental leadership and its clean-tech industry leadership, or more specifically the ability of California's climate regulations to help spur innovations in clean energy and other sectors?