Speculation about California Gov. Gavin Newsom potentially replacing President Biden on the 2024 ballot has intensified amid concerns about Biden’s age and approval ratings. While Newsom is viewed as a rising star in the Democratic Party, there are growing apprehensions about adopting California’s policies nationwide, especially given the state’s economic challenges linked to environmental regulations.
California has been at the forefront of stringent environmental regulations, spanning land-use, emissions, substance disclosures, and renewable energy mandates. These policies provide a glimpse into the potential consequences of a broader climate agenda.
Recent laws, such as new emissions reporting requirements for businesses with over $1 billion in sales in the state, add to a slew of existing environmental regulations. These regulations, including bans on internal combustion engine vehicles and mandatory solar panels on new houses, contribute to the rising cost of living in California.
The economic impact of these environmental policies is particularly burdensome for the poor, exacerbating the state’s existing problem of poverty. California’s cost of living is 40% higher than the national average, making it challenging for ordinary workers to afford housing, electricity, food, and transportation. The state has witnessed an exodus of both businesses and citizens due to the increasing cost of living.
The newly introduced emissions reporting requirements are more stringent, requiring companies to account for both direct and indirect emissions, including those from employee commuting and product usage. This not only adds to the cost of doing business but also introduces challenges in quantifying and reporting indirect emissions accurately, opening the door to manipulation and legal disputes.
While major tech companies can absorb these costs more easily, small and midsize businesses, along with middle-class citizens, face greater challenges. The article emphasizes the importance of making environmental policies sustainable, efficient, and cost-effective to avoid exacerbating California’s already high cost of living.
In conclusion, the piece questions the equity of environmental policies that, if not carefully crafted, may render a cleaner environment accessible only to the wealthy, leaving ordinary citizens facing economic hardships.
Author: Paul Mueller, PhD, Senior Research Fellow at the American Institute for Economic Research
