The lure of creating a thriving “green” economy has politicians around the world scrambling to push green policies through their legislatures. But a recent study from California says that the state will suffer job losses, higher-priced goods, lower business profits and reduced income if it goes ahead with its climate policies and other jurisdictions don’t follow suit.

For some industries and firms, the negative impacts from the policies could be significant.

Worse still, the report admits that while the researchers are sure the effect of the climate policies will be negative in the near term, they’re unsure how the policies will play out for the state’s economy in the future—largely because it’s impossible to determine who will follow California’s lead in implementing the policies. If others don’t join in, then California may struggle to keep up.

This means there’s the very real possibility that the supposed “green” economy never materializes, while the state’s traditional industries flee to areas with easier climate-change regulations.

This exile, the researchers say, is known as “economic leakage”. That’s when businesses take their activities to other states and nations that have not yet pursued, or have passed easier, climate policies. The amount of economic leakage could have a major impact on the effect of California’s climate policies, as the more businesses that flee the state, the lower will be the overall reductions in Greenhouse gases.

Read the report here.

Energy Probe is a keen supporter of renewable energy. We believe renewable energy has the ability to diversify our electricity supply, while allowing for more decentralized sources of power for consumers. But we’re not in favour of throwing massive subsides at forms of energy that are not technically or economically feasible.

Read the previous gangrene economy report, "La dolce vita: green and unemployed" here.