* Low energy use means small cost for small business
* Study says figures based on "pessimistic" scenario
By Peter Henderson
SAN FRANCISCO, Dec 9 California's global
warming law, similar in scope to a measure under consideration
by the U.S. Congress, will have a negligible effect on the
bottom lines of small businesses, a study showed on Wednesday.
The report, prepared for the nonprofit Union of Concerned
Scientists, found that small businesses generally do not use
much energy, so even a spike in energy costs would have little
effect on profits.
Further, most small businesses compete with local rivals,
increasing the likelihood that higher costs could be passed on
to consumers by all the competitors.
California law requires cuts in greenhouse gases to 1990
levels by 2020, spurring myriad studies on what would happen to
"These are based on assumptions that we think are actually
very pessimistic," said Mark Sarro of the economics research
firm Brattle Group, which did the study for the Union. "We're
fairly comfortable that the overall economic impacts also would
be manageable, but we haven't estimated them."
The study calculates that a worst case scenario would be
for energy price to jump 28 percent by 2020. That would still
leave small business energy costs relatively low -- the
equivalent of less than 2 percent of total sales for an average
Many small businesses have criticized the 2006 California
climate change law, which is introducing a trading scheme for
global warming gases, an increase in car mileage requirements
and a hike in the prices of carbon intensive fuels, as well as
new building codes and other regulation.
One estimate by a small business group said costs would
rise 4.5 percent.
The latest study did note that manufacturing -- the
industry many officials look to for economic growth -- was more
exposed to energy prices than other industries and more open to
competition from outside the state.
Big business might suffer more than small ones from higher
energy prices in part because manufacturers tend to be big
companies, Sarro said.
Large companies also are more likely to face out-of-state
competition, he added, but they likely have time to adapt.
(For more environmental news see our Environment blog at
(Reporting by Peter Henderson; Editing by Xavier Briand)