O Insurgente

California’s Potemkin Environmentalism. Por Max Schulz.

A celebrated green economy produces pollution elsewhere, ongoing power shortages, and business-crippling costs.

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California’s environmental policies have made it heavily dependent on other states for power; generated some of the highest, business-crippling energy costs in the country; and left it vulnerable to periodic electricity shortages. Its economic growth has occurred not because of, but despite, those policies, which would be disastrous if extended to the rest of the country.

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A dirty secret about California’s energy economy is that it imports lots of energy from neighboring states to make up for the shortfall caused by having too few power plants. Up to 20 percent of the state’s power comes from coal-burning plants in Nevada, New Mexico, Utah, Colorado, and Montana, and another significant portion comes from large-scale hydropower in Oregon, Washington State, and the Hoover Dam near Las Vegas. “California practices a sort of energy colonialism,” says James Lucier of Capital Alpha Partners, a Washington, D.C.–area investment group. “They rely on western states to supply them with power generation they are unwilling to build for themselves”—and leave those states to deal with the resulting pollution.

Another secret: California’s proud claim to have kept per-capita energy consumption flat while growing its economy is less impressive than it seems. The state has some of the highest energy prices in the country—nearly twice the national average, a 2002 Milken Institute study found—largely because of regulations and government mandates to use expensive renewable sources of power. As a result, heavy manufacturing and other energy-intensive industries have been fleeing the Golden State in droves for lower-cost locales. Twenty years ago or so, you could count eight automobile factories in California; today, there’s just one, and it’s the same story with other industries, from chemicals to aerospace. Yet Californians still enjoy the fruits of those manufacturing industries—driving cars built in the Midwest and the South, importing chemicals and resins and paints and plastics produced elsewhere, and flying on jumbo jets manufactured in places like Everett, Washington. California can pretend to have controlled energy consumption, but it has just displaced it.

It isn’t just the high price of power that’s compelling California businesses to shift operations to other regions. The state’s unreliable power grid has its economic costs, too. A 2003 U.S. Department of Energy report noted that “a recent rolling blackout in the greater San Francisco Bay area caused an estimated $75 million in losses in the Silicon Valley.” A 20-minute outage at a Hewlett-Packard circuit-fabrication plant, the report observed, “would result in a day’s production loss at a cost of $30 million.” As Jack Gerard, then-president of the National Mining Association, put it in a 2001 speech: “Events are proving that the most expensive kilowatt is the one that’s not there when needed.”

The shortages are starting to rattle some Silicon Valley heavyweights. Intel chief executive Craig Barrett, for instance, vowed in 2001 not to build a chip-making facility in California until power supplies became more reliable. This October, Intel opened a $3 billion factory near Phoenix for mass production of its new 45-nanometer microprocessors. Google, meanwhile, has chosen to build the massive server farms that will fuel its expansion anywhere but in California. The most celebrated is an enormous installation along the Columbia River in The Dalles, Oregon, a facility that will house tens of thousands of computers, requiring mind-boggling amounts of power. A 1.8-gigawatt hydroelectric power plant will offer Google power for a small fraction of what it would cost in the Golden State. The irony is that the Silicon Valley companies that have become the face of California’s twenty-first-century economy are increasingly building the facilities that will give them their future value in other states.

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Given all its failings, what sort of leadership example does California offer the rest of the country? It’s hard to claim credibly that California illuminates the world when it has trouble illuminating itself. Further, California’s particular path makes sense only if the rest of the country refuses to follow it. The state’s lawmakers and regulators have enacted policies that for several decades have allowed Californians to feel good, even smug, about their environmental credentials. Yet California’s economic prosperity has relied on the fact that other states have built power plants and established sensible regulatory regimes that don’t force businesses to flee. The power plants scattered throughout the western United States, as well as the factories in the American Midwest and South, have consistently saved California from the folly of its own anti-energy agenda.

California isn’t content to keep its energy policy within state limits, however. Recently, it passed a law barring state utilities from entering into long-term contracts to buy electricity from out-of-state producers if coal is used in generating it. “They are clearly trying to trim down the growth of coal, not just in California, but elsewhere,” said a top official at the U.S. Department of Energy. “California is using their regulations to direct the economic development of the West. And it is arrogant and it is appalling.”

California is certainly within its rights to set policies for itself and to live with the consequences. But everyone can’t do what California does. Someone needs to build power plants and oil refineries. Someone needs to manufacture the cars, trucks, airplanes, and other pieces of heavy equipment that enrich Americans’ lives, till our fields, and grow our economy. Someone needs to produce the plastics and chemicals that undergird our prosperity. Those things require energy, and lots of it—growing amounts of it.