California is likely to see modest job losses in the near term from its aggressive climate change policy due to higher energy costs and other factors, the state’s independent Legislative Analyst’s Office said.

The budget watchdog was responding to a request by Republican state Senator Dave Cogdill to study the effects of California’s 2006 climate change law, which mandates changes to cut greenhouse gas emissions to 1990 levels by 2020.

California’s environmental vanguard approach is being hotly debated in the state ahead of a November gubernatorial race and in the midst of an economic downturn that has pushed unemployment to recent records. Many other states and the federal government are watching closely.

“We believe that the aggregate net jobs impact in the near term is likely to be negative,” said the report, dated March 4. “Reasons for this include the various economic dislocations, behavioral adjustments, investment requirements, and certain other factors,” it said.

The total effects on the economy near- and long-term are likely to be modest, since energy costs are a relatively small share of expenses for most people living and doing business in California, it said.

The state agency responsible for implementing the law is working on a revised economic analysis after a first draft met widespread criticism. That revision is expected this month. The Legislative Analyst’s Office based its comments on the original version.

(Reporting by Peter Henderson; Editing by Gary Hill)

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