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December 14, 2010
The Brattle Group Completes Report on the Effect of California Climate Policies on California Cities

Economists at The Brattle Group completed a report that examines how California’s Global Warming Solution Act (AB 32) is likely to affect California cities, focusing in depth on the potential impacts of these policies on Chula Vista, a mid-sized city in San Diego County. The study reveals that AB 32, which requires the state to reduce its global warming pollution approximately 12 percent below current levels by 2020, is expected to have a minimal impact on Chula Vista and other cities, as most local governments are not very energy-intensive. The study projects that while the state’s clean energy policies will cause the price of energy to rise slightly, the energy expenditures represent a relatively small share of the California economy overall, and thus the rise in energy costs will result in very modest changes in economic activity throughout the economy. The indirect impact on Chula Vista, whose characteristics typify many such cities in the state, will be minimal, and both the direct and indirect effects of AB 32 will have a barely noticeable impact on residents —additional energy costs of less than $2 per year. Chula Vista currently spends about 1.7 percent of its revenue on energy. Without implementing any AB 32 clean energy policies, but including aggressive energy efficiency measures Chula Vista has put in place to reduce its energy use, the city’s spending on energy would increase about 25 percent (to 2.1 percent of total revenue) in 2020. Implementing AB 32 policies would increase this spending by less than 2 percentage points (to 2.3 percent of total revenue) by 2020. The analysis was released today by the Union of Concerned Scientists. Brattle principals Jurgen Weiss and Mark Sarro led the study, in addition to two previous studies that analyzed the impact of AB32 on California small businesses. Please follow the links below to download the new study, “The Economic Impact of AB 32 on Localities: A Look at Chula Vista,” as well as the previous studies.