California Adopts Vast Greenhouse Gas Reduction Plan

MARGOT ROOSEVELT, The Los Angeles Times, December 12, 2008

California regulators adopted the nation’s first comprehensive plan to slash greenhouse gases on December 11th and characterized it as a model for President-elect Barack Obama, who has pledged an aggressive national and international effort to combat global warming.

The ambitious blueprint by the world’s eighth-largest economy would cut the state’s emissions by 15% from today’s level over the next 12 years, bringing them down to 1990 levels.

Approved by the state’s Air Resources Board in a unanimous vote, the 134 page plan lays out targets for virtually every sector of the economy, including automobiles, refineries, buildings and landfills. It would require a third of California’s electricity to come from solar energy, wind farms and other renewable sources — far more than any state currently requires.

Gov. Arnold Schwarzenegger, who has been a vigorous advocate of the plan, vowed that it would “unleash the full force of California’s innovation and technology for a healthier planet.”

Businesses, however, are sharply divided.

Automakers oppose California’s pending crackdown on carbon dioxide emissions from cars, a regulation that more than a dozen states have pledged to adopt. Manufacturers want regulators to lower the cost of complying, saying it will lead to billions of dollars in higher electricity costs.

“This plan is an economic train wreck waiting to happen,” James Duran of the California Hispanic Chambers of Commerce told the board, saying that it would cause financial hardship to minority-owned companies.

But Bob Epstein, a Silicon Valley entrepreneur, led a coalition of energy, technology and Hollywood executives, including Google Chief Executive Eric Schmidt, in endorsing the plan as a spur to the state’s lagging economy.

Investors have poured $2.5 billion into California cleantech companies in the first nine months of the year, up from $1.8 billion for all of 2007, he said, a level that eclipsed the software industry.

“This plan is a clear signal to investors to invest in California,” Epstein said.

Schwarzenegger, a sharp critic of President Bush’s opposition to climate legislation, said, “When you look at today’s depressed economy, green tech is one of the few bright spots out there.”

California’s plan will be “a road map for the rest of the nation,” he predicted.

After an aborted attempt last spring, Congress is expected to renew its efforts to craft climate legislation next year. Many of the elements in contention are addressed in California’s blueprint, including a cap and trade program that would allow industries to reduce emissions more cheaply.

In 18 months of public hearings and workshops, hundreds of people testified and more than 43,000 comments were submitted. More than 250,000 copies of the plan have been viewed or downloaded from the air board’s website in the last two months.

The state’s blueprint will be implemented over the next two years through industry specific regulations. Republican legislators have called on Schwarzenegger to delay the plan, citing the dire state of California’s economy and criticism of the air board’s economic models.

Fears were also expressed by city and county officials who said the plan’s effort to force land use changes infringes on local powers. Environmentalists want more ambitious strategies to curb the sprawl that has led to a rapid increase in driving, and thus in greenhouse gases.

Worldwide, emissions of planet warming gases, which are mainly formed by burning fossil fuels, have been growing far more rapidly than scientists had predicted. California is expected to experience severe damage from climate change by mid-century, including water shortages from a shrinking snowpack, increased wildfires, rising ocean levels and pollution aggravating heat waves.

Given the state’s fast growing population and sprawling suburban development, its emissions are on track to increase by 30% over 1990 levels by 2020. The new blueprint would slash the state’s carbon footprint over the next 12 years by a total of 174 million metric tons of greenhouse gas emissions — the equivalent of 4 metric tons for every resident.

Despite the reach of the state’s effort, it would barely make a dent in global warming: The state’s emissions account for about 1.5% of the world’s emissions. Nonetheless, air board Chairwoman Mary Nichols said California’s leadership has spurred other states to move ahead. “We are filling a vacuum left by inaction at the federal level,” she said.

More than two dozen states have committed to capping emissions since California passed its landmark 2006 global warming law, the trigger for this action by the Air Resources Board.

California has joined with four Canadian provinces and seven western states to form a regional cap and trade program. Under the program, the states would set a total allowable amount of emissions — as California did in its blueprint. Utilities and other large industries would be required to obtain allowances to cover their emissions. If companies cut emissions more than required, they can sell their extra emission reductions to firms that are not able to meet their targets.

A cap and trade system has been adopted in Europe, where it was initially fraught with logistical problems and afforded windfall profits to many industries. California’s system, which would apply to industries responsible for 85% of its emissions, is the most controversial aspect of its plan.

Groups representing low income residents of polluted urban areas testified that allowing industries to trade in emissions would lead to dirtier plants in their neighborhoods. Under California’s plan, industries would also be allowed to buy “offsets” — emission reductions from projects in other states, or possibly foreign nations, to avoid making their own reductions.

However, the board assuaged many environmentalists Thursday when it pledged that it would gradually move toward a system to auction 100% of greenhouse gas permits, rather than give the permits away for free, as was initially the case in Europe.

Bernadette del Chiaro, an energy analyst for Environment California, predicted the auctions could bring in $1 billion at the outset and up to $340 million per year by 2020.

“This is huge,” she said. “Revenue from polluters would be used to transit to a green economy.”

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