SAN FRANCISCO A recent study examining the costs of more stringent energy efficiency legislation showed that laws like California’s Global Warming Solutions Act may end up costing small businesses only pennies.
In a report released this week, researchers from the Union of Concerned Scientists explored the Global Warming Solutions Act of 2006, commonly known as AB32, which established a program of regulatory and marketing mechanisms to reduce greenhouse emissions in California to 1990 levels by 2020. The report attempts to dispel concerns that increasing regulation of greenhouse emissions will cause an economic burden on small business.
The researchers selected a Border Grill restaurant in Santa Monica, Calif. to study the impact of the state’s new climate law because foodservice operations tend to use more energy and because the restaurant industry represents about 10 percent of the state’s employment.
After evaluating the restaurant’s electricity and gas use over the past five years, the report concluded that climate change policies will only increase the percent of revenue spent on energy by 0.3 percentage points, from 1.4 to 1.7 percent, by 2020.
For Border Grill that would mean a mere 3 cents more per $20 meal, if the costs were passed onto consumers. The report full is available at www.ucsusa.org/small_business.
While implementation of the California law is still in progress, researchers based their impact projections on the state Air Resources Board’s roadmap for implementing the climate plan, which was released last year. The study was conducted by The Battle Group, an international economic consulting firm, and commissioned by environmental group the Union of Concerned Scientists, based in Cambridge, Mass.
“Our report finds that the incremental cost of AB32 on the average California small business will be relatively small and definitely manageable,” said Jurgen Weiss of the Brattle Group, and co-author of the report. “The AB32 cost impact pales in comparison to the effect of inflation over 10 years, and falls well within the range of historic cost variation most small businesses face every day, regardless of climate policy.”
The report, however, only looked at changes due to climate policies, and did not consider other factors that could increase fuel costs, or the corresponding increases in food and other goods. The assessment was based on government projections of fuel and energy costs over the next decade. In the extreme, the report estimates that energy prices will rise about 28 percent overall.
The assessment also assumed that Border Grill would make some energy efficiency upgrades during the 10 year period, such as changing out some lighting and replacing refrigerators with more efficient models.
It should also be noted that Border Grill owners Mary Sue Milliken and Susan Feniger have long been champions of the environment and already follow environmentally sound practices, such as composting and promoting menu options that use less meat because livestock are a source of greenhouse gas emissions.
The report found that while Border Grill was relatively energy efficient for a restaurant, it still averaged a much higher energy use than most small businesses.
Milliken said they initially were concerned because their planet-friendly efforts were more focused on things like installing a water purification system to reduce the use of bottled water, serving sustainable seafood and composting.
“We hadn’t really looked at things like changing light bulbs and refrigeration equipment,” she said.
“In the end, we learned that they project in the next 10 years that climate laws would really impact our bottom line by very little,” she added. “Now we’re really energized about how to make more changes. It’s about taking baby steps.”
Contact Lisa Jennings at [email protected].
