Mandatory greenhouse gas emissions reporting that would lay the foundation for a state CO2 cap-and-trade program and investments in pollution-reduction technology over the next two years are essential for achieving a carbon-lite economy, according to a just-released draft report by the California Climate Action Team. The state analysis warns that global warming will cause "acute and chronic problems," including decreased snowpack and hydropower. In addition, rising summer temperatures are expected to push up California's electricity consumption. "By 2020, this would translate to a 1 to 3 percent increase in demand resulting in potentially hundreds of extra energy expenditures," according to the report to the governor and Legislature released December 8. It estimates that a loss of 10 percent of in-state hydro generation, for example, would result in net replacement energy costs of $350 million per year - assuming a cost of 10 cents\/kWh. It also warns about threats to the state's agriculture, coastlines, and forests. The Climate Action Team recommends that a CO2 cap-and-trade program capture as many industrial sources as possible "and should certainly reach beyond the electricity sector." At the same time, it acknowledges the difficulty of including power plants, other stationary sources, and cars and other moving vehicles in a single program. Therefore, sector-based emission caps, which may include the energy market, oil refining and gas extraction, and a fuel-based carbon cap, should also be considered, notes the report. An industry-focused cap would cover about 30 percent of the state's emissions. Capping the total carbon output of oil, gas, and coal consumed in-state is expected to cover about 75 percent of the state's climate change gases, it concludes. The report recommends that requisite emissions reporting be folded into the current voluntary program so that the governor's CO2 reduction goals announced last June can be turned into a statewide CO2 cap in 2010, making way for a trading program. Governor Arnold Schwarzenegger signed an executive order to cut greenhouse gases in 2010 by 11 percent, or 59 million tons, and in 2020 by 25 percent, or 145 million tons (Circuit, June 3, 2005). Investor-owned utilities and several generators have signed on to the voluntary emissions reporting program. Actions taken in California "make a difference; not only because we are a major contributor to the problem but also because California is known throughout the world as a leader in addressing public health and environmental issues," states the team's draft report. Its issuance coincides with the international climate change conference in Montreal being held this week, where the U.S. government has come under attack for its intransigence on the issue. The report applauds the $2 billion that investor-owned utility ratepayers will pay for energy-efficiency measures over the next two years. It estimates that that investment will save 7,371 GWh and 121,989 million therms. "By 2008, these programs will reduce carbon dioxide emission by more than 3 million tons per year." Meeting the 20 percent renewables portfolio standard by 2010 and pushing up the level of green supplies to 33 percent by 2020 were also touted. California is the 12th-largest emitter of greenhouse gas pollution in the world, notes the report. Generation of in-state power plants results in about 633 pounds of CO2 per megawatt-hour, compared to an average of 1,188 pounds\/MWh in the West - principally from coal-fired plants, according to a study released in the fall (Circuit, Oct. 21, 2005). Copies of the report are available at www.climatechange.ca.gov.