Stop Prop 23: The ‘fact sheet’ vs. the facts

The economic benefits of climate and clean energy policies, such as California’s Global Warming Solutions Act, or AB 32, are clear. The Center for American Progress and this blog have reported on the opportunities for growth and job creation from AB 32 several times (see “A California Campaign With Global Consequences” and Economists agree, don’t block AB 32!). The Stop the Dirty Energy Proposition coalition provides additional background here.

Despite this, the oil-funded campaign to pass Proposition 23 that would repeal AB 32 is continuing to spill misinformation with a new “Fact Sheet: Green Jobs Utopia Is A Myth.” Aside from the fact that their arguments are nonsense, the “fact sheet” does not include any facts. There is not a single source or citation on the page.

CAP’s Rebecca Lefton and Sean Pool have the real facts.

The Spanish study from the Universidad Rey Juan Carlos the oil-funded Prop 23 campaign presumably refers to has been thoroughly discredited and its ties to the oil industry revealed (See Tall Tales from Spain and Sorting Global Warming Fact from Fiction.) In fact, as CAP’s report “Out of the Running?” shows, Spain’s “model green economy” is driving innovation in clean-energy technology, creating a fertile ground for business investment, and creating thousands of jobs in a country hard hit by the global economic downturn. Economists predict 270,000 jobs to be created because of its suite of policies to develop markets, financing, and infrastructure for clean energy technology development. As a result of this comprehensive approach, Spain’s renewable energy sector had 89,000 direct jobs and 90,000 indirect jobs in 2007 and the country ranks fourth in a global ranking of clean-energy technology sales as a proportion of respective gross domestic product. The U.S., which so far has failed to enact a national climate and energy policy, tails the rest of the G20 at 19th.


But California is a bright spot in the U.S. for clean-energy growth. Though the state as a whole is suffering from the recession like the rest of the country and even more so as a result of a serious budget crisis, California’s renewable energy policies are already creating jobs and are fostering a healthy and thriving spawning ground for whole new clean-energy industries. And, contrary to the oil campaign’s second “fact” that Tesla’s new plant cost taxpayers $493,000 per job, taxpayers haven’t paid anything much at all.

Palo Alto-based Tesla was awarded a $465,000,000 loan guarantee in June 2009 to help finance a manufacturing facility for the Tesla Model S sedan. It’s important to understand that this is a loan guarantee, not a grant, and that the federal government has not — and will not — given Tesla a single dollar. By issuing a guarantee, the government pledges to pay back a loan if the borrower is unable to make the payments. This is a cost-effective support the government can provide that significantly lowers the costs of borrowing money for Tesla.

While the oil-funded Prop 23 campaign’s “fact sheet” claims Tesla is in financial trouble, nothing could be further from the truth. In reality, despite an overall downward trend in the market, Tesla saw its share price skyrocket by 40 percent on its first day of public trading on June 29, 2010 from $17.00 to $23.89. Since then, the company has announced plans to produce 20,000 electric vehicles per year after 2012 and add as many as 1,000 jobs.

Tesla is also breaking the ground for other investors who are now more willing to make clean energy transport ventures. According to the Cleantech Group, transportation was the leading clean-tech sector for venture capital in the first quarter of 2010. A new electric-vehicle index by McKinsey predicts that the U.S. is “the country most likely to lead the emergence of electric cars as a means of mass transportation,” in large part because it is “the only country that has provided large-scale financial support to the industry.”

The fact sheet’s third “fact” is again missing a proper citation, but the one cherry-picked example they use hardly proves a trend. There are many counter-examples of companies flooding into California specifically because of its progressive climate and energy policies. For example, Brightsource Energy recently received final approval to build the world’s largest concentrating solar energy project in San Bernardino County, California. It will nearly double the amount of solar thermal energy produced in the U.S. today. Ausra, an Australian solar company, also signed an agreement with a California Utility in 2007 to build over 100 MW of power in California after the passage of the Global Warming Solutions Act. Then there’s Origin Oil a company making sustainable next generation biofuels from algae in Los Angeles, Serious Materials, a building efficiency company headquartered in Silicon Valley, Tesla, an electric vehicle company that located a manufacturing plant in California recently, and the list goes on. The Stop the Dirty Energy Proposition campaign has more on how thousands clean energy businesses are locating in California precisely because of its climate change law.


And finally, the last claim implicitly blames California’s unemployment rate on its climate and clean energy laws when it says

“Before the passage of AB 32, California’s unemployment rate roughly tracked the national average, our unemployment is now one of the nation’s highest with entrepreneurs reluctant to invest in a state ranked as one of the highest taxed and least economically free in the nation.”

This spurious claim blows out of proportion the impact of new pollution control policies in AB 32, many of which have not even been implemented yet, completely ignores the much more significant effects of the global economic recession and California’s ongoing budget crisis on employment, and conflates correlation with causation — a common error in quantitative analysis. And that’s not their only error. In fact, the California Legislative Analyst’s Office found that the argument that California’s climate policies have destroyed jobs contains “a number of serious shortcomings that render its estimates of the annual economic costs of state regulations essentially useless.” In contrast, actual California companies such as Google, Cisco, Apple, HP, Intel, Pacific Gas & Electric, Silicon Valley Bank and Meg Whitman’s old company, eBay all oppose Proposition 23.

Try as they might to put lipstick on a pig, the Texas oil companies behind Proposition 23 don’t have a shred of evidence that their so-called “jobs initiative” will actually create a single Californian job. But what economists from academia to the California Legislative Analysts Office know is that it will drive one of California’s fastest growing and most innovative sectors out of the state and possibly overseas.

Rebecca Lefton is a Researcher with CAP’s Progressive Media, Sean Pool is Special Assistant for Energy, Science and Technology Policy. Read their previous posts on Prop 23’s economic impact, national repercussions, and funding from Texas oil companies.