Time to Move to Mars?

The environmentalists’ war on fossil fuel-powered cars is about to exact the heaviest-ever toll on new housing production. Industry talk is all about the rollout of Climate Action Plans (CAP for short) and their related greenhouse gas emission rollbacks. Let’s take a look at the CAP, a state-sanctioned policy tool the greens newly use to alter or stop new home developments. It’s a still evolving part of our ever-expanding environmental regulations. Dislike or love a CAP, the fact is it will eat us alive housing cost-wise.

CAP-related regulations are long on goals but woefully short on implementation detail (i.e. how we actually achieve these greenhouse gas rollback results). They will add untold development cost to any project whose future occupants shall mainly rely on four wheels for transportation. Let’s recall a bit of history albeit with a bit of gallows humor.

Housing affordability and supply must not be a casualty in the pursuit of climate action.

A former Governor of ours, the one who uttered the now famous one-liner, “I’ll be back,” inspired a national precedent setting law called the California Global Warming Solutions Act of 2006 (a.k.a. AB32). AB32 required the State to roll back their greenhouse gas emissions by enacting follow on legislation to force whopping cutbacks over base year 1990. That same year the movie “Total Recall” came out. In it, Arnie plays a construction worker with a serious senior moment affliction.   Our fellow tradesman travels to Venusville on Mars to blow up a reactor to create an atmosphere to allow its liberated population to thrive. The film with its unmistaken environmental message is, you might have guessed, related to AB32.

What was science fiction in 1990 will become an expensive reality. California’s homeowners and renters alike will pay a steep price for saving the planet as housing costs adjust to pay for the greenhouse gas rollback. Fast forward to today and to the recent signing of SB32 by Governor Brown. This Senate version of AB32 implements Arnie’s green legacy by setting hardline greenhouse gas emissions limits.

This Bill would become conditionally operative on or before January 1, 2017. It requires the State Air Resources Board to ensure statewide greenhouse gas reductions by a factor of 40% below the 1990 emissions level by 2030. Let me assure you that Sacramento did not bother to run a proper economic benefit analysis before setting this figure. How do we know? Net Zero Energy alone, a related post-2020 greenhouse gas reduction policy, will add $45,000 in new compliance cost to build a single new home. Only luxury housing can bear that cost.

New homes built in California are already the Nation’s most energy – and water use efficient homes. Moreover, survey upon survey show that people overwhelmingly want to keep their car and have the choice to live in a suburban setting. But, Climate Action Plans will upend these choices and uniquely punish millions of people who depend on their car to drive from where they can afford to live to the place that pays their bills. This CAP policy pursuit is akin to forcing producers of Hybrids and all-electric vehicles to up their game dramatically. It makes little sense. However, the die was cast and the year 2030 is not a science fiction timetable. That’s just 14 years from now.

Housing affordability and supply must not be a casualty in the pursuit of climate action. It threatens to deny us the very panacea our record-high housing markets needs most of all, a substantial uptick in supply to bring costs down. Will reason prevail? Given the recent defeat of Governor Brown’s “By-Right” proposal and their new focus on CAPs, the environmentalists clearly signaled that the public's interest in having access to more housing will be thwarted.  Follow the Sierra Club's legal moves on San Diego County's CAP to understand the new threat to housing. 

With SB32 with us now, Arnie the Terminator did come back and housing development costs already show it. It may be time to move to Mars. Earth is getting too expensive.

P.s.  One good brushfire will release enough greenhouse gas to nullify much of these high-cost rollbacks. Might not better fire management and prevention be a smarter approach?