Officials Reach California Deal to Cut Emissions

Officials Reach California Deal to Cut Emissions
Felicity Barringer, New York Times, 31-Aug-2006

State on Verge of Greenhouse Gas Restrictions
Marc Lifsher and Jordan Rau, Los Angeles Times, 31-Aug-2006

Assembly Speaker Fabian Nunez, a Los Angeles Democrat, left, and the president pro tem of the state Senate, Don Perata of Oakland, during the announcement of the deal to limit greenhouse gas emissions.

SACRAMENTO, Aug. 30 ­ California’s political leaders announced an agreement on Wednesday that imposes the most sweeping controls on carbon dioxide emissions in the nation, putting the state at the forefront of a broad campaign to curb the man-made causes of climate change despite resistance in Washington.

The deal between the Democratic-controlled Legislature and the Republican governor, Arnold Schwarzenegger, calls for a 25 percent reduction in carbon dioxide emissions by 2020, and could establish controls on the largest industrial sectors, including utilities, oil refineries and cement plants. The state has already placed strict limits on automobile emissions, although that move is being challenged in federal court.

The Bush administration has rejected the idea of similar national controls on carbon dioxide emissions, and efforts to get Congressional approval for such firm caps on emissions have repeatedly been defeated.

Although the deal in California is strongly opposed by Republicans in the Legislature and many business leaders across the state, it assures that a bill on the restrictions will be passed before the legislative session ends Thursday and will be signed by Mr. Schwarzenegger, the leaders said Wednesday.

The first major controls are scheduled to begin in 2012, with the aim of reducing the emissions to their level in 1990. The legislation allows for incentives to businesses to help reach the goals, but opponents warn that the state may be sacrificing its economic interests for a quixotic goal.

“If our manufacturers leave, whether for North Carolina or China, and they take their greenhouse gases with them, we might not have solved the problem but exacerbated it instead,” said Allan Zaremberg, the president of the state’s Chamber of Commerce.

Since taking office in 2003, Mr. Schwarzenegger, who is seeking reelection in November, has supported efforts to fight climate change, most recently by signing an agreement with Prime Minister Tony Blair of Britain to do cooperative research on new clean-energy technologies.

The governor said Wednesday that the deal struck with Democrats would make “California a world leader in the effort to reduce carbon emissions.”

“The success of our system will be an example for other states and nations to follow as the fight against climate change continues,” Mr. Schwarzenegger added.

The Assembly speaker, Fabian Núñez, who sponsored the bill along with Assemblywoman Fran Pavley, said at a news conference here, “We feel that California has always been a leader in protecting the environment.”

“We now have moved it to the next level,’’ said Mr. Núñez, a Los Angeles Democrat. “We’d all like to see California one day be carbon free.”

The state’s action, he said, could set off a “bottom-up” movement for curbs of heat-trapping gases in states around the country.

That has been the goal of national environmental groups like Environmental Defense and the Natural Resources Defense Counsel, which helped sponsor the California legislation. It has also been the goal of Ms. Pavley, a Democrat from Agoura Hills and the author, in 2002, of a groundbreaking law reducing tailpipe emissions of heat-trapping gases.

Already, the governors of New York, New Jersey, Delaware and four New England states have signed an agreement to curb power-plant emissions, cutting them by 10 percent by 2019. That would amount to about 24 million tons, said Dale Bryk of the New York office of the Natural Resources Defense Counsel, about one-seventh of the total envisioned in the California legislation, which will be an estimated 174 million tons.

Ms. Bryk added that Massachusetts and New Hampshire had enacted some emissions curbs, but that the number of power plants involved was minuscule compared with the California effort.

A recent poll of Californians by the Public Policy Institute of California showed nearly four of five respondents said urgent action on climate change was needed.

Aside from its long coastline, which could be vulnerable to sea-level rises due to global warming, the state depends on the Sierra Nevada snow pack for much of its water.

A study in 2004 by the National Academy of Science showed that unchecked global warming would cut the size of the snow pack by at least 29 percent by the end of the century. It also predicted a doubling in the number of heat waves, like the record-breaking one in July that killed 139 people statewide.

The deal on Wednesday on the emissions legislation nearly foundered at least three times in the past week as Mr. Schwarzenegger’s negotiators reached seeming impasses with the Legislature over important issues: whether the bill would require the creation of market mechanisms like emissions credits to help industries meet the new standards; how broad to make exemptions during emergencies like the state’s electricity crisis six years ago, and how to administer and enforce the law.

In the end, after three weeks filled with late-night sessions, according to legislative staffers who were not authorized to speak for attribution, Mr. Núñez met with Mr. Schwarzenegger on Wednesday morning and said that the Assembly and the Senate had agreed on final language and intended to enact the legislation with or without his consent.

That left the governor to decide whether the final language fell so far short of his wishes that he could take the political risk during an election year of vetoing a signature piece of environmental legislation whose aims he had supported.

In the end, the governor and the legislative leaders, including the Senate president, Don Perata, Democrat of Oakland, announced their agreement.

Ralph Cavanagh, the co-director of the energy program of the Natural Resources Defense Council, said in a telephone interview: “This is not an act of altruism. This is an act of enlightened self-interest. By accelerating the effort to reduce global warming pollution, California will benefit its own economy and environment and in so doing will set the best possible example for other states and nations.”

Business leaders had been divided on the climate-change measure, with leading venture capitalists from Silicon Valley openly stumping for passage, saying the measure will create new industries and new jobs. The state’s Chamber of Commerce led the opposition, saying that the measure would prompt an exodus of industry to other states without emission controls, while California would be hamstrung in trying to attract out-of-state businesses.

The bill gives the California Air Resources Board, which enforces the state’s air pollution controls, the lead authority for generally establishing how much industry groups contribute to global warming pollution, for assigning emission targets, and for setting noncompliance penalties. It sets out a two-year time frame, until 2009, to establish how the system will operate and then allows three years, until 2012, for the industries to start their cutbacks.

Peter Darbee, the chairman and chief executive of Pacific Gas and Electric, broke with his industry as PG&E became the first and possibly only major utility in the state to support the legislation, called the Global Warming Solutions Act.

“The issue of climate change is important and needs to be dealt with,” Mr. Darbee said. “We need a pragmatic and practical result. Since the bill has a market-based program, it will work efficiently and effectively for businesses.”

A safety-valve provision that, in an emergency, could give companies a year’s hiatus in complying with their mandates, was also key, he said.

Wednesday’s announcement is significant for Mr. Schwarzenegger’s re-election campaign, potentially vaulting the governor beyond his Democratic challenger’s reach.

Mr. Schwarzenegger, whose popularity plummeted after a group of polarizing ballot initiatives failed at the polls last year, has been steadily pedaling to the left for months, supporting legislation to increase the state’s minimum wage, to make some prescription drugs more accessible and to improve the state’s environment by adding thousands of subsidized solar roofs over the next decade.

His strategy seems to be to appeal to the sensibilities of voters that have long driven the state’s politics and to distance himself openly from President Bush. Recent polls suggest that Mr. Schwarzenegger enjoys a wide lead.

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SACRAMENTO — Gov. Arnold Schwarzenegger and legislative leaders agreed Wednesday on a plan to cut by 25% the amount of greenhouse gases emitted from California electric power plants, refineries and other sources by the year 2020.

Later, the agreement was approved by the Senate 23 to 14 with Democrats supporting it and Republicans opposed. It then went to the Assembly, where final approval was expected.

It would make California the first state in the nation to fight global warming by slapping caps on carbon dioxide and other emissions.

Wednesday's compromise followed weeks of intense lobbying by environmentalists, who supported tough standards, and business groups, which labeled the bill a top "job killer" of the legislative session set to end today.

The governor was pleased. "The success of our system will be an example for other states and nations to follow as the fight against climate change continues," he said in a statement released just after top Democratic lawmakers announced the agreement.

The deal was also seen as a rebuke to the Bush administration, which favors voluntary efforts to reduce greenhouse gases.

Assembly Speaker Fabian Nuñez (D-Los Angeles) praised the compromise as "a huge opportunity to champion not just on the national level but the international level a significant piece of environmental legislation."

Business interests, especially oil companies, were irate and said they felt abandoned by the Republican governor, who had pledged to work for a bill they could support. They accused Schwarzenegger and Democrats of cobbling together behind closed doors a haphazard bill that could create unintended economic chaos.

"We remain very concerned about the long-term impact of this legislation on jobs, the economy and our industry's ability to continue meeting increasing demand for gasoline and diesel fuels," said Tupper Hull, a spokesman for the Western States Petroleum Assn.

Environmental activists were satisfied with the compromise, although they had sought more stringent controls. They called the greenhouse gas reduction plan proposed for California more sweeping than a more limited effort by a group of Northeastern states to curb emissions from electric power plants.

"For years, the world has been waiting for the United States to step up to the plate and do something about global warming. This bill is basically the first step," said Bernadette Del Chiaro, an advocate for Environment California.

They also expressed hope that the victory in Sacramento would be a signal to the Bush administration to take more forceful action.

The compromise immediately positioned Schwarzenegger as a national leader in the burgeoning movement to curb greenhouse gas emissions.

It also allows him to burnish his credentials as a political centrist in blue-state California during the final 10 weeks of his reelection campaign against the Democratic state treasurer.

Schwarzenegger pushed himself into the international spotlight last month by signing a cooperative agreement on greenhouse gases with British Prime Minister Tony Blair.

"It takes another issue away from Phil Angelides," said Jack Pitney, a government professor at Claremont McKenna College. "It isn't the top issue, but for Schwarzenegger it raises the comfort level of Democrats and independents. Signing this bill makes the political climate more hospitable to the governor."

The compromise bill, AB 32, was sponsored by Nuñez and Assemblywoman Fran Pavley (D-Agoura Hills). In 2002, Pavley was author of a law limiting carbon emissions from motor vehicles that is being challenged by the auto industry.

The latest bill authorizes the California Air Resources Board to begin a process of measuring the amount of carbon dioxide and other greenhouse gases coming from every major pollution source, including electric power plants, oil refineries and cement kilns.

Once a tally is taken, regulators would set limits for each facility and industry that would take effect beginning in 2012. Emissions would be reduced gradually, dropping to 1990 levels in eight years.

Most major business groups don't like the caps and contend that placing limits on California industry alone will not curb greenhouse gases globally.

Instead, they said, the caps on emissions will only drive up the cost of California's already expensive electricity and force many large employers to flee to other states with more permissive regulatory climates.

What's more, "the authority given to regulatory agencies is vast," warned Dorothy Rothrock, vice president of the California Manufacturers & Technology Assn.

Other business lobbyists took a more modest stand toward the proposal but said they remained disappointed that the governor did not stick to his guns in insisting that the bill specifically mandate a market-based program for trading emissions credits.

Rather, the bill says that such a trading system "may" be created if the Air Resources Board deems it effective for lowering levels of carbon dioxide in the air.

Many businesses contend that they are unlikely to invest billions of dollars in new equipment if they don't have the flexibility to trade carbon credits.

Other business groups, including venture capitalists who invest in alternative fuels and high-tech pollution-control equipment, contend that putting limits on greenhouse gases will spur the creation of thousands of jobs and new industries.

"By combining market-based mechanisms and enforceable emissions reductions, this bill strikes the right balance between improving the environment and protecting the economy," said a statement from Pacific Gas & Electric Co., the state's largest investor-owned electric utility, which is based in San Francisco.

Until Wednesday, a deal appeared elusive. In fact, Nuñez had scheduled an afternoon news conference with environmentalists to announce that the Legislature would proceed with the bill — without the governor's support.

But just before the news conference, Nuñez told the environmentalists that the governor's chief of staff, Susan Kennedy, had called him to say Schwarzenegger would sign the bill after all.

Administration officials said later that the governor acted after his staff assured him that the final version met his goals.

The symbolism of who was in the driver's seat at the end was made clear at the news conference, where Democratic lawmakers and environmentalists gleefully announced the deal while a lone Schwarzenegger press aide stood outside the room to distribute a written statement by the governor.

The final bill contains concessions from both sides. Schwarzenegger had to give up his desire of having his administration officials set and enforce the rules. Democrats demanded and got the more independent Air Resources Board to enforce the rules instead.

For his part, Schwarzenegger won the ability for the governor to suspend the rules for as much as a year in cases of "extraordinary circumstances, catastrophic events or threat of significant economic harm."

It will be a major new responsibility for the Air Resources Board, which will have to hire about 100 workers and will require an annual budget of about $20 million. The board can assess fees on the companies it regulates to pay for its operation.

Copyright 2006 Los Angeles Times

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