Based on sheer size and population, California produces a significant volume of greenhouse gas emissions. If California were a country, it would be the 19th largest producer of greenhouse gas emissions in the world. However, on a per capita basis, California ranks 46th among the 50 states in greenhouse gas emission rates. While per capita electricity consumption nationwide has increased almost 50 percent since the mid-1970s, due to successful conservation efforts, California’s per capita electricity consumption has been relatively flat. According to the U.S. Department of Energy, the average household in California uses only 587 kilowatt hours per month.
California has been at the forefront of legislation to prevent global warming by reducing greenhouse gas emissions. AB 32, California’s Global Warming Solutions Act of 2006, establishes a comprehensive program of regulatory and market mechanisms to achieve real, quantifiable, reductions of greenhouse gases that were intended to be cost effective. This law establishes a statewide greenhouse gas emissions cap for 2020, based on 1990 emissions (a year when California had entered a recession), and grants to regulators broad authority to regulate to achieve these goals.
Under an executive order from Governor Schwarzenegger, the California Air Resource Board, CARB, will require utilities to produce a third of their power from renewable sources within a decade. California already has a rule that utilities obtain 20% of their energy from renewable energy sources by this year’s end, though it is not anticipated that goal will be reached. If fully implemented, the 33% renewable energy standard will remove between 12 million and 13 million metric tons of carbon dioxide per year, along with other pollutants, according to CARB. It also will be a major step towards meeting the targets of California's greenhouse gas reduction law, AB32. CARB estimates cost of implementing this regulation to be $2.5 billion, which would increase energy costs by about one cent per kilowatt hour, but cost over $200 per metric ton of carbon removed.
AB 32 allows CARB great latitude in developing approaches and regulations. The first round of regulations have already been implemented. They include CARB’s low-carbon fuel standard, restrictions on some refrigerants, increased landfill methane capture, truck efficiency programs, tire pressure program, reduction of greenhouse gases in consumer products, ship electrification at ports, reduction of perfluorocarbon from the semiconductor industry, and sulfur hexafluoride (SF6) reductions in non-utility and non-semiconductor applications. CARB is, also, allowed and encouraged to create a market-based “cap-and-trade” program which would be implemented by 2012. The proposed cap-and-trade program would cover the 600 largest sources of greenhouse gas emissions in the state, and is well under way towards implementation.
If you recall, the "American Clean Energy and Security Act,” also know as the Waxman-Markley energy bill, which was passed by the House and then stalled, modeled itself on the California plan. AB 32 serves as an experimental laboratory to the nation of the concerns and problems and possibly the results from attempting to prevent climate change by controlling CO2 emissions in this way. Under AB 32, CARB must determine how to achieve these reductions, within the deadlines. In 2008, CARB released a scoping plan outlining the measures that it would take in order to meet the 2020 emissions reduction requirement. As California unemployment climbed past 12% a movement began to suspend the enactment of AB 32. This legislation passed during better economic times has costs and impacts on business and is vulnerable to this kind of action.
Proposition 23, on California’s November 2010 general election ballot, would suspend the implementation and operation of AB 32, California’s Global Warming Solutions Act of 2006, until state unemployment rates remain at or below 5.5 percent for four consecutive quarters. That level has been reached three times since the state began compiling these statistics in 1976. Proposition 23 would suspend regulations already adopted under AB 32 and would also prohibit state agencies from continuing their adoption of new implementing regulations and related directives. This would punish any business or person who had already implemented technology and/or procedures to reduce their greenhouse gas emissions and create confusion.
While Proposition 23 would suspend AB 32 and its existing regulations, it does not push back or otherwise delay the 2020 aggregate greenhouse gas reduction target contained in AB 32. If Proposition 23 were to pass, the binding target of achieving 1990 greenhouse gas emissions levels by 2020 would become effective again once the suspension is removed. So, the minute the economy booms, all the regulations would become effective immediately. The incentive would be for California businesses to keep unemployment above 5.5%. Both candidates for governor have come out against the proposition, but I believe for different reasons. Suspending the legislation in this way would create an untenable regulatory and compliance environment. Perhaps the more direct path of taxing oil and other sources of greenhouse gasses would have been simpler to moderate during times of economic duress by simply reducing the tax to stimulate the economy. Stay tuned to California for more adventures in the economic and political impacts of greenhouse gas regulation.