The state administration and Democratic leadership have locked horns over the greenhouse gas reduction bill, AB 32, by Assembly speaker Fabian Núñez (D-Los Angeles) and Assemblymember Fran Pavley (D-Woodland Hills). The governor is pushing for a mandatory cap-and-trade program, as well as increasing his control over the proposed nine-member Greenhouse Gas Reduction Council. The bickering is in sharp contrast to the bipartisanship displayed during signing of the Million Solar Roofs implementation bill, SB 1, at the beginning of the week. “AB 32 has ten times the magnitude of energy deregulation, affecting all sectors of the economy,” said Linda Adams, secretary of the California Environmental Protection Agency, August 23. She said the administration, which she represents, is concerned that allowing – instead of mandating – a cap-and-trade program and other market-driven strategies will cause “market mechanisms to be left behind.” Dan Skopec, CalEPA undersecretary, added that limiting the bill’s mandates to regulatory action will eliminate “compliance flexibility.” If California’s global warming reduction plan is mishandled, it will “scare off the rest of the nation” from establishing similar programs, he warned. The differences come down to this: The bill’s authors and environmentalists give greater weight to conservation and energy efficiency. The administration’s stance is that mandating a market system that allows businesses to profit from buying and selling CO2 credits will provide more greenhouse gas reductions. “Regulatory measures have a track record for cleaning up the air while the market mechanisms do not,” said Bill Magavern, Sierra Club legislative coordinator. He and others find the administration’s fight to require the establishment of market-based programs and its generic opposition to “command and control” regulatory programs inconsistent. “It is the slavish market ideology that gave us electricity deregulation,” Magavern said. Some suspect that the governor’s stance is aimed at appeasing part of the business community that opposes the bill, including the California Chamber of Commerce. Calls to the chamber were not returned before press time. Sources bet that Democrats will not further appease the governor. The bill’s authors have met some of Governor Arnold Schwarzenegger’s recent demands, including giving the state chief executive a majority on the new climate change council. Under the August 22 version of the bill, the council, which is charged with developing a CO2 reduction plan, would be made up of the heads of the CalEPA, the California Air Resources Board, the California Public Utilities Commission, and the California Energy Commission – all gubernatorial appointees. The head of the state would also choose a public representative. The remaining four board members would be selected by lawmakers – with two of the four being an economist and a climate change expert. According to Adams, the governor wants to be able to select more than five of the board members. The administration also wants to expand its power beyond responding to “unforeseen circumstances” to include authority to adjust the global warming gas reduction deadlines. Currently, AB 32 limits his intervention to acting in emergencies following two-thirds approval by the council. Another issue in dispute is how to set the baseline from which reductions will be measured, which is another key piece of the bill. AB 32 requires greenhouse gas levels to drop to 1990 levels by 2020 in accordance with Schwarzenegger’s CO2 reduction goals announced in June 2005. The bill gives the Air Resources Board the authority to develop and enforce regulations to meet that goal, which has the support of the governor. The implementing rules would be in place by 2010, and reduction levels would start to kick in two years later. The air board members are picked by the state chief. To become law, AB 32 must be signed by the end of this month. In other legislative news, after three years of work, SB 1 by Senator Kevin Murray (D-Los Angeles) was enacted August 23. During a press conference in Los Angeles, the governor signed the measure. It sets parameters for the solar regulatory program that created $3 billion in ratepayer-funded subsidies to engender 3,000 MW of sun-powered generation over the next 10 years. The governor said that this additional clean energy will “reduce the output of greenhouse gasses by 3 million tons, which is like taking one million cars off the road.” The measure expands the cap on net metering from 0.5 percent of utility customers to 2.5 percent (Circuit, Aug. 23, 2006). Performance-based standards for solar energy systems will replace capacity-based ones, and munis are called on to create an $800 million solar power program. Also enacted this week was legislation that exempts wastewater produced by the exploration and production of geothermal power from hazardous waste regulations. Geothermal development and production can release heavy metals into the wastewater. Under SB 1294 by Senator Denise Ducheny (D-San Diego), the discharge would be regulated just by the regional water quality board and not the Department of Toxic Substances Control.