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According to Cohen, the relationship is probably neutral when all is fully accounted for. In other words, regulations pertaining to pollution, resource exploitation, and other environmental harms are neither inherently "good" nor "bad" for the immediate economic prospects for growth. However, they can be good or bad to specific parties who might benefit from certain existing regulations, or the lack thereof, at the expense of others. Thus, Cohen says the real reasons why environmental regulations have become a whipping post for many lawmakers, and the interests they represent, is probably political in nature, having more to do with the ways that environmental policy affects the distribution of income, or how many regulations can undermine existing monopolies or privileges in favor of innovators.
Cohen offered the example of new laws that might require more stringent pollution controls on fossil fuel power plants: "Either those plants will be built with more pollution controls, or alternative and renewable energy sources of electricity [or energy efficiency projects] will be needed to fulfill the demand for electricity. So, if there is reduced investment in coal-fired power plants," resulting from new environmental regulations, Cohen concluded that "there will be investment elsewhere to produce the needed electricity." In other words, the economy neither grows nor shrinks, but the distribution of wealth and power certainly shifts.
In recent years, California has seen exactly this scenario play out. A 2006 law virtually banned electricity produced by coal-fired power plants, either from the few existing coal plants located in the state, or from existing and planned coal plants in Utah, Arizona, New Mexico, and elsewhere. Predictably, the main opponents to this new regulation on CO2 and mercury pollution were entrenched coal companies and utilities with planned major coal energy investments. Some called the regulation a "job killer" and claimed it would tank California's economy, but partly because it was signed into law by then Republican Governor Schwarzenegger, the claim that it was a misguided liberal environmental initiative didn't stick.
Rather than eliminating jobs and bogging down the economy, the new mandate has instead guaranteed a massive influx of money and labor into the construction of cleaner power plants. These mostly include gas-fired generators, but also a significant shift of investment has gone toward solar, wind, and geothermal projects. As a result, today only 7.7 percent of California's gross system power is sourced from coal-fired plants, whereas in 2005 it was 20 percent, according to the California Energy Commission.
In short, laws that reduced coal electricity purchases reduced carbon and mercury emissions, while also providing a much needed stimulant for the state's green economy. The Bay Area, in particular, boasts perhaps the highest concentration of solar firms of any US region. Companies here work across all levels of the industry, from major designer-developers of thermal solar arrays like BrightSource Energy, Inc., to installers of photovoltaic arrays like Sungevity, both based in Oakland. Various venture capital and investment funds in San Francisco and Silicon Valley, meanwhile, are eagerly helping finance solar expansion.
California's laws and regulations give solar and other renewable energy companies a leg up in one of the largest energy markets in the world, allowing them to operate on a more level playing field with the entrenched powers of the major utilities and energy companies heavily vested in coal, oil, and gas technologies. This has tempted companies like SunEdison, which has developed more than five hundred mega watts of solar energy across the country, to relocate its headquarters to the Bay Area, a place where the company notes there is clear demand for the product and a talented, experienced workforce. "We believe that California will be the largest market, and we want to be part of that," SunEdison president Carlos Domenech told the San Francisco Chronicle in October last year.
So why does the jobs-versus-environment trope still get so much play? "An important reason you often hear this," observed Cohen, "is that the entrenched industries with existing political connections are those most likely to be negatively affected by environmental regulations — while those who are most likely to benefit are more dispersed and oftentimes politically less connected."
"Those who have to pay the cost of environmental policies and those who benefit from them are often not the same companies," noted Stefan Ambec, a senior researcher at the Toulouse School of Economics in France who concurs with Cohen on the subject of why many environmental regulations are unfairly demonized. Ambec's view is informed by the situation in Europe, where regulations are much more developed and stringent than in the United States, but he observes that the sources of opposition to regulation and remediation are very much the same.
"Big companies in concentrated industries like steel, oil, and electricity production are reluctant to [support] policies like the carbon tax, or carbon trading, and the new companies of the 'eco-industries' are often smaller firms and less politically powerful," Ambec continued. This lack of political power and lack of resources to make their case in the media, according to Ambec, results in clean-tech and green-tech firms losing out to established, dirtier companies using older technologies, simply because the status quo outspends emergent innovators in securing favorable politicians and laws.
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