Battle Over California Climate Law Will Have National Ripple Effect

Victory for Texas oil interests would squash forward progress of state's burgeoning clean energy economy

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WASHINGTON—This is not your father’s classic “tree hugger” vs. “big business” fracas.

Instead, a Nov. 2 ballot initiative aimed at derailing California’s landmark global warming legislation pits a coalition of about 400 local business, civic, labor and environmental organizations against a smattering of out-of-state oil refiners and connected groups.

And it has observers plenty nervous about a ripple effect. With an economy that is the eighth largest in the world, and the biggest among all US states, California points the way to the energy future.  

“This is polluters versus the new economy of clean technology,” Steven Maviglio told SolveClimate in a telephone interview from his California office. “It’s a cheap date for oil companies to try and kill this legislation and make political hay.” 

Maviglio is a spokesperson with Californians for Clean Energy and Jobs, the coalition rallying around Assembly Bill 32, also known as the Global Warming Solutions Act of 2006. Signed into law by Republican Gov. Arnold Schwarzenegger, it requires the Golden State to slice heat-trapping gases to 1990 levels by 2020.

A group called the California Jobs Initiative ponied up about $3 million to place the initiative—known as Proposition 23—on the ballot. Records show the bulk of its funding comes from Texas oil companies Valero and Tesoro.

Proponents of the far-reaching and unique AB 32 fear that just the threat of Proposition 23 could stymie burgeoning state and federal efforts to propel the country toward a low-carbon economy. 

“Many are viewing this as a bellwether on climate change policy around the country,’ Maviglio noted. “California has always been progressive with clean energy and environmental standards. No doubt this could be a blow to the national movement if the most progressive state takes a step backward.”

Those affiliated with the California Jobs Initiative make it clear that the proposition doesn’t directly kill AB 32. Rather, it suspends the legislation until the state unemployment rate drops from 12.4 percent to 5.5 percent for four successive quarters. The last time that scenario occurred was in a period that ended in June 2007.

“That has happened three times in 30 years,” Maviglio said about California maintaining such a low unemployment rate for four quarters in a row. “It’s a once in a blue moon economic condition.”

California Magnet for Clean Tech

The current jobless rate, hovering near 12 percent, means more than 2 million Californians are unemployed. But AB 32 backers maintain that figure would be even higher if the state hadn’t been so aggressive about attracting businesses focused on clean energy and technology.

“We have a robust clean technology sector that is the fastest growing part of our economy,” Maviglio said, adding that suspending AB 32 could paralyze business growth because of the uncertainty factor it introduces.

About 500,000 Californians work in clean technology or green jobs, according to the California Employment Development Department. Other numbers gathered by the pro AB 32 campaign show green jobs have grown at a pace 10 times faster than the statewide average of job growth since 2005. Plus, the state’s clean technology sector received $2.1 billion in capital investments during 2009. That’s five times as much as the nearest competitor, Massachusetts.

Rolling back AB 32 could dampen investments in clean energy technologies and green jobs, according to a study by the nonpartisan Legislative Analyst’s Office.

Compliance with AB 32 is scheduled to begin in 2012. Its comprehensive greenhouse gas reduction program includes increased renewable energy, cleaner fuel requirements, and mandatory emission reporting and fee requirements for major polluters such as power plants and oil refineries. To satisfy the bill’s requirements, the California Air Resources Board set a greenhouse gas emissions limit of 427 million metric tons of carbon dioxide equivalent.

Out-of-State Dollars Fund Proposition 23

While Valero, Tesoro and other small refineries are bankrolling the bulk of the California Jobs Initiative, at least $498,000 has come from a Missouri-based group called the Adam Smith Foundation. Maviglio’s number-crunching reveals that 80 percent of the funding comes from outside California’s borders.

A report released by the Political Economy Research Institute at the University of Massachusetts, Amherst ranked Valero and Tesoro as No. 12 and No. 32, respectively, on a national list of “Toxic 100 Air Polluters.”

Those with the California Jobs Initiative are convinced AB 32 will harm the economy by forcing consumers to pay higher energy costs.

“AB 32 will impose billions of dollars in higher utility rates and fuel prices on California families when they can least afford it,” said Jon Coupal, president of the Howard Jarvis Taxpayers Association and co-chair of the proposition’s campaign committee said via an April news release. “The California Jobs Initiative will let voters—not politicians and unelected bureaucrats—decide whether or not now is the right time for this massive new energy tax.”

Dollars to Keep AB 32 in Place

Californians for Clean Energy and Jobs counts AARP, the NAACP, the American Lung Association, the Silicon Valley Leadership Group and the state’s largest gas and electric utility among its supporters.

“We at PG&E are committed to helping California make progress on both its environmental and economic goals, moving us toward a low-carbon economy while minimizing the impact on customers as we make this necessary transition,” Pacific Gas &Electric chairman and chief executive officer Peter Darbee said this week when announcing his San Francisco-based company’s support for AB 32. “Studies show that unchecked climate change could cost California’s economy alone tens of billions of dollars a year in losses to agriculture, tourism and other sectors.”

“We have a rainbow of endorsements,” Maviglio said, adding that both Schwarzenegger and George Shultz, secretary of state under President Reagan, are on board.

Support from eBay has put Republican gubernatorial candidate Meg Whitman in a tight spot. Before the June 8 primary, the former CEO of the Internet giant tried to score points against her Republican rival Steve Poizner by speaking out against AB 32.

Now that the governorship is a race between Whitman and attorney general and former Gov. Jerry Brown, Whitman has not yet taken a stance on Proposition 23.

What the Latest Polls Say

Half of California’s registered voters say that the state’s landmark environmental legislation will drive investment in green technology and create green jobs while 38 percent say that same legislation will raise the price of energy and cut traditional jobs. Those numbers comes from a poll of 600 registered voters that Ipsos conducted for Reuters and released June 30.

On its Web site, Californians for Clean Energy and Jobs draws attention to the significant disparity that emerges under party affiliation. For instance, Democrats favored AB 32 by a 68-21 percent margin and Independents supported it by a 56-30 percent margin. Among Republicans, however, those numbers were about reversed with 27 percent voicing support and 62 percent giving the measure a thumbs down.

Despite those poll numbers, Maviglio wouldn’t venture a guess as to what the status of AB 32 will be on the morning of Nov. 3.

“It’s a fairly radical initiative,” he said. “It’s going to be a tough battle.”