California Policy Makers Open Throttle on Climate Change

Alleviating global warming was the talk of the town this week in both the state and the nation's capitals. Elected officials competed to outdo each other with press conferences, new legislation, release of a key report, and legislative committee hearings on mitigation strategies. There was an important difference between the Beltway and L Street in Sacramento. While Washington pols focused on volunteerism, California policy makers initiated plans to create a mandatory cap on greenhouse gases. In addition, investments to significantly increase energy efficiency and renewable power, not volunteerism, are being promoted by the state. An overdue report by California's Climate Action Team released April 3 calls for a cap on carbon dioxide emissions. The governor's staff had been waiting for the team's final report since mid-February. Administration officials, like the governor's adviser Terry Tamminen, said they could not stake out new greenhouse gas policy prior to the issuance of the report. The team's report calls for a cap on CO2 emissions from the energy industry as well as other sources, including refineries and the gas extraction and cement industries, but not transportation. In addition, the document would have the state develop a tradable CO2 market that could be linked with other systems. The climate team endorsed a cap-and-trade program because it "provides a broad market signal that can guide investments and economic behavior in an efficient way while allowing for considerable flexibility." For the electricity industry, the team called for a limit based on the carbon content of the fossil fuel feeding generating units that power the state, whether within or outside California. Utilities and generators serving the state would be responsible for measuring and reporting their fuel use and emissions. A ceiling also would be placed on emissions from natural gas utilities. In the wake of the report, Governor Arnold Schwarzenegger held an April 4 press conference. He announced that he hopes to sign several bills to reduce greenhouse gas emissions before the year's end. However, he stopped short of expressly backing any specific legislation or recommendations pitched by the Climate Action Team. Instead, he announced that he would host the first of six meetings on climate change reduction recommendations on April 11 in San Francisco. Also under the spotlight this week was a measure by Assembly speaker Fabian Núñez (D-Los Angeles). Coauthored by Fran Pavley (D-Agoura Hills), AB 32 aims to cut projected greenhouse gas emissions by 25 percent by 2020. According to Jennifer Galehouse, Núñez consultant, reductions under AB 32 would lower CO2 pollution to 1990 levels. That goal mirrors part of the governor's proposal announced last June (Circuit, June 3, 2005). The bill's specifics, however, were not available by press time. "It is an economic and technology revolution, and California will benefit significantly by taking a leadership role," said Michael Hanemann, U.C. Berkeley professor of economics. He told the Assembly Natural Resources Committee during an April 3 informational hearing that California's economy could adjust "quite well" to being fossil-fuel lite. Hanemann is a member of the Climate Action Team. "California has taken a historic step," said Schwarzenegger with the release of the report. Yet he punted on the cap-and-trade program proposals. Asked about Schwarzenegger's position on the Núñez-Pavley bill and the report's cap-and-trade recommendation, the governor's office referred Circuit to the California Environmental Protection Agency. That was basically a nonanswer because Cal EPA is limited to addressing questions about the report, not ones about the governor's position. A greenhouse gas trading market, along with other climate change measures, will add $4 billion to California's economy and create 83,000 new jobs by 2020, according to the action team's report. Other programs factored into the mitigation scheme include implementation of a 33 percent renewables portfolio standard and the California Public Utilities Commission's 3,000 MW Solar Initiative. The plan also includes building and appliance efficiency standards and measures on the transportation sector. Meanwhile, in the nation's capital, a day-long Senate hearing devoted to climate change mitigation contrasted sharply with developments in Sacramento. Most of the speakers at the April 4 Senate Energy and Natural Resources Committee insisted that any measures to slash greenhouse gases be optional, not mandatory. Most of the hearing's 29 participants also asserted that real reductions were dependent on new technology investment and development, including in clean coal, along with energy efficiency. A half dozen companies, including Pacific Gas & Electric Corp, Sempra and Calpine, however, called for a mandatory national emissions cap In Washington D.C., debate focused largely on how to allocate greenhouse gas credits under a voluntary cap-and-trade program and where to measure the underlying emissions. At issue are about $30-$40 billion worth of annual pollution credits and who should or will reap those benefits. The cost of the program is estimated at up to $4 billion a year. Margo Thorning, vice-president of the American Council for Capital Formation, asserted that a mandated emissions cap would "increase prices, reduce growth, won't drive technology that is needed, and create uncertainty." She called for optional measures and tax code reform to accelerate depreciation for clean technology. Senator Dianne Feinstein (D-California) strongly disagreed that setting a mandatory cap would harm the economy. As proof, she pointed to findings in the just-released Climate Action Team report. "Everything I see is an economic advantage because sooner or later global warming will affect every company and entity on the planet," Feinstein added. The senator plans to introduce legislation in about two weeks that will reduce greenhouse gas emissions, but far less than California's legislation. The state is the sixth largest economy in the world and the twelfth largest source of greenhouse gas emissions worldwide. Failing to take immediate action at the state and national levels could take an enormous toll on California's human, environmental, and economic health. The state could see as much as a 10 F degree increase in temperatures and an 85 percent increase in ozone pollution in Los Angeles and San Joaquin County by the end of the century, warns the action team. Failure to slash CO2 pollution could cause up to a 30-inch sea level rise along our coasts and a 90 percent loss of snowpack by the end of the century. "It is important for California to move forward" on the greenhouse gas reduction front, Schwarzenegger said. Shortly after the U.S. Senate hearing discussed voluntary action, the governor at his press conference also made note of the federal government's sorry environmental record. Elizabeth McCarthy Editors' note: For an in-depth look at California?s response to climate change, Circuit offers a 60-page report covering the state?s actions..

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California Policy Makers Open Throttle on Climate Change

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