California’s Green Ways Are Under Attack

By Jonathan Weber of The Bay Citizen for The New York Times. June 26, 2010.

Californians, and especially politically liberal Northern Californians, take a lot of pride in the state’s history of aggressive environmental regulation. This is the state whose air-quality initiatives all but invented automobile emissions controls. It is a place where the high-tech industry supports stringent pollution rules, pointing to the thousands of jobs being created in the solar power business as an example of how a tech-driven industry can lead an economic renaissance — and offer cleaner air, too.

Even with a Republican, Arnold Schwarzenegger, sitting in the governor’s chair, California has pushed hard on the environmental front, especially with the 2006 passage of AB 32, an ambitious effort to reduce greenhouse gas emissions in the state.

In this context, it comes as a bit of a shock to see an effort to undo AB 32 gaining traction. A November ballot initiative would suspend the law until the state’s unemployment rate — currently at 12.4 percent — drops to 5.5 percent or less for an extended period.

The effort is driven by the lousy economy, and specifically the concern that stringent greenhouse-gas reduction targets could raise costs for consumers and businesses and worsen unemployment. The initiative is also — surprise —financed by oil companies, which are major emitters of greenhouse gases and have the most to lose from any shift away from carbon-based fuels.

While stopping short of advocating the sweeping long-term roll-back envisioned by the initiative, Meg Whitman, the Republican candidate for governor, has called for suspending parts of AB 32. With her Democratic opponent, Jerry Brown, the attorney general, promoting a plan to create 500,000 “clean-energy jobs,” the whole matrix of issues surrounding environmental protection and energy policy promises to be front and center this fall.

The California debate bears a lot of resemblance to the national argument over energy legislation, especially a cap-and-trade plan to reduce carbon emissions. Opponents of cap and trade fear that it will function as a new tax on businesses. Proponents say it’s necessary to save the planet and will stimulate investment in clean energy, helping the economy.

In fact, AB 32 already implements in California much of what is envisioned in the national law — and that has a lot to do with the state’s drawing about half of all clean-energy investment in the nation.

“AB 32 is an important piece of California’s attraction for the renewable energy industry,” said Julie Blunden, executive vice president for public policy at the SunPower Corporation, a leading solar power firm. The company employs nearly 1,000 people in the state, many in well-paid jobs.

“Why have companies chosen to locate here? Long-term, visible policy supporting clean energy,” Ms. Blunden said, is a big part of the answer.

As a general matter, alternative energy remains highly dependent on such “policy support”; carbon-reduction rules are only the half of it.

Nationally, the solar power industry is booming, the result of the passing in 2008 of an eight-year extension of an investment tax credit and a subsequent measure that allows companies to get cash payments in lieu of tax credits if they don’t actually owe any taxes. (Whether this last provision is extended is an issue still pending in the Congressional energy debate.)

According to a study released last week by the International Energy Agency, solar could reach “grid parity” on price with coal and natural gas by 2020. That means, of course, that subsidies and other incentives will be needed for some time yet.

Academics still debate the merits of such policies, but for many people in California, they look like a no-brainer. The solar industry has already created tens of thousands of jobs. The electric car industry could create tens of thousands more.

“The thing the Bay Area does best is incent entrepreneurs, gather and deploy capital and choose management teams,” said Wade Randlett, entrepreneur, Democratic activist and chairman of the San Francisco biodiesel firm NextFuels Inc.

Government policies and incentives create the framework for those things to happen, Mr. Randlett argues. And in the case of sustainable energy, they merely level the playing field with a fossil fuel industry that is not required to pay for its many “externalities,” be they pollution or trade deficits or even wars to protect oil supplies.

Clean-energy industry executives I spoke with said they were confident that the anti-AB 32 effort would fail. If they’re right, it will be nothing less than a reaffirmation of an important California faith — in, of all things, the power of government.

See the original post on the New York Times.