When Arnold Schwarzenegger signed AB 32 into law in 2007, he called California’s cap-and-trade bill a pathway to a green-energy economic bonanza.  A new study commissioned by California’s state auditor calls it a bust.  The Wall Street Journal reports that the study shows that AB 32 will push jobs out of the state, and draws the appropriate lesson about a national cap-and-trade system for energy and manufacturing production:

California, that former land of opportunity, was one of the first states to pass its own version of “cap and trade” to reduce greenhouse gas emissions. In 2007 when Governor Arnold Schwarzenegger signed the law, called AB-32, he said it would propel California into an economy-expanding, green job future. Well, a new study by the state’s own auditing agency—its version of the Congressional Budget Office—has burst that green bubble.

The study released May 13 concludes that “California’s economy at large will likely be adversely affected in the near term by implementing climate-related policies that are not adopted elsewhere.” While the long-term economic costs are “unknown,” the study finds that AB-32 will raise energy prices, “causing the prices of goods and services to rise; lowering business profits; and reducing production, income and jobs.”

The economic reality here is what the Legislative Analyst’s Office calls “economic leakage.” That’s jargon for businesses and jobs that will “locate or relocate outside the state of California where regulatory-related costs are lower.” The study says the negative impact on most California industries will be “modest,” but energy-intensive industries—specifically, aluminum, chemicals, forest products, oil and gas and steel—”may significantly reduce their business activity in California.”

Yes, some new “green jobs” will be created. But the “net economywide impact,” it says, “will in all likelihood be negative.”

Where have we seen this before?  Oh, yes, in Spain — where the attempt to artificially create a “green economy” through government intervention against traditional energy resulted in a financial disaster:

Pajamas Media has received a leaked internal assessment produced by Spain’s Zapatero administration. The assessment confirms the key charges previously made by non-governmental Spanish experts in a damning report exposing the catastrophic economic failure of Spain’s “green economy” initiatives.

On eight separate occasions, President Barack Obama has referred to the “green economy” policies enacted by Spain as being the model for what he envisioned for America. …

Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.

The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.

California attempted to minimize the damage to its economy by asking neighboring states to join a mutual-economic-suicide pact to impose the same controls.  None of them volunteered to jump off the Golden Gate Bridge along with California.  Most if not all of them must have been licking their chops at the prospect of California businesses looking eastward to escape the high costs and overreaching regulation in their current locations.

Voters will get a chance to deliver their own verdict on AB 32 in November.  The ballot will contain a referendum to amend the law in order to suspend its operation while unemployment in the state remains above 5.5% — and at the moment, it’s at 12.6% and going up.  If it passes, it will send a signal to politicians in both Sacramento and Washington that voters care a lot more about their jobs and pocketbooks than ecological hobby horses.