New Study: Clean Energy Standards Barely Impact Small Business

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Much has been written, including by myself, about the fact that small business organizations range form neutral to hostile on green issues.  There is a perception that environmental progress will cost small businesses resources they don’t have. The truth is that not much research has been conducted to prove or disprove that notion.

Yesterday a study was released that shows just how little impact clean energy standards will have on small businesses. In fact, it concluded that the economic impacts could be measured in pennies.

According to a new study by The Brattle Group, California’s landmark clean energy law (AB 32) will have virtually unnoticeable impacts on small business. The study follows-up on an analysis done in December 2009 to calculate the effects of AB 32 on a Los Angeles restaurant.

From a press release issued yesterday:

“Small businesses will experience a barely noticeable impact from California’s transition to clean energy,” said Jurgen Weiss, a principal of The Brattle Group and co-author of the report. “Similar to last year’s findings, the changes from implementing clean energy policies are minor. They’re actually smaller than the typical price fluctuations that small businesses already face, and are much smaller than the expected rate of inflation.”

The new analysis, “The Economic Impact of AB 32 on Small Business: An Update,” examines a San Diego-area based grocery store and tortilla production facility that specializes in Central American and Mexican foods. The analysis shows that AB 32 will cause a rise of less than 0.1% in the average price of retail goods by 2020 – literally three cents more for a year’s worth of tortillas.

Mercado International 2000 is family-owned and operated since 1995 and employs 30 people in the San Diego region. Mercado was selected for this case study because of its higher-than-average energy use in a highly competitive industry to ensure the study would provide a conservative estimate of AB 32’s potential economic effects.

Gerardo Hererra, the owner of Mercado International 2000, said, “This study has shown me that our store can continue providing our customers with excellent customer service, fresh products, and affordable groceries while reducing our own energy use and helping the state meet its clean energy and climate goals. It’s a win-win-win situation.”

The report, issued by the California Business Alliance for a Green Economy, uses empirical data on the cost characteristics of small businesses to estimate the economic impacts of AB 32. The update to the original report incorporates newly available energy market data and analysis and applies this to a new small business case study. The overall results confirm the 2009 findings.

“Our business members understand that transitioning toward clean, reliable sources of energy will ultimately save money and drive the creation of new jobs,” said Susan Frank, coordinator for the California Business Alliance for a Green Economy. “Small businesses prove every day that they can improve their bottom line while using cleaner energy, reducing waste, lessening dependence on fossil fuels, and improving energy efficiency.”

The Brattle Group projected the likely changes in electricity, natural gas, and gasoline prices due to the major AB 32 policies: pollution cap that puts a price on carbon, a 33% renewable energy standard, increased energy efficiency measures, and a low-carbon fuel standard.

“I have taken a number of modest steps to improve energy efficiency in my business, all of which have benefited my bottom line and given me a competitive advantage,” said Thomas Ackerman, Vice President of Spirit Graphics in Chula Vista and member of the California Business Alliance for a Green Economy. “This study confirms what I already knew: AB 32 won’t hurt small businesses, and in the long term, it will be good for California companies.”

The report is available online.



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