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A working model for a new president

California is leading the way on climate change, reports Fred Pearce, with an Australian company likely to make a major contribution

Fred Pearce 6 November 2008 2033 words

WITH BARACK OBAMA headed for the White House, the race is on to bring the United States back into the international community fighting climate change. Much will hang on negotiations between governments to find a successor to the Kyoto Protocol. But the real business in the next few months will be to find a blueprint for domestic action. And legislators say they need look no further than what is going on right now in California.

California, the US’s most populous state, has always been the pioneer of American action on air pollution. At the offices of the California Air Resources Board in the state capital Sacramento they talk proudly of their long efforts, started in 1968, to curb Los Angeles smogs. This is where they dreamed up emissions standards for lawn mowers and solvents, as well as pioneering cleaner tailpipes. And now they believe they are set to pioneer what will become national standards aimed at cutting carbon dioxide emissions.

“We are doing what we want the federal government to do,” Eileen Tutt, deputy secretary of the California Environmental Protection Agency told me before the election. “We want the new administration to have a working model in front of them when they arrive at the White House. We are creating the biggest plan to fight climate change in North America. We are the biggest game in town.”

The California blueprint is already set to be adopted – in outline at least – by much of the rest of the American west, the seven US states and four Canadian provinces that make up the Western Climate Initiative.

The state’s Republican governor Arnold Schwarzenegger may be an unexpected convert to the cause of environmentalism. But he is said to be partly inspired to pollution busting by his son’s affliction with asthma. And many other Californians realise that, living in a desert and dependent on snowpacks for water, they are in the front line on climate change.

Schwarzenegger set out his strategy in the California Global Warming Solutions Act of 2006, known internally as the AB32. A full “scoping plan” on how the state plans to implement the Act was published in June this year, and it is expected to go before the Air Resources Board for a final vote in early December.

Till now, battling for state law on carbon dioxide emissions has been an uphill task. Even before the passage of AB32, California has been fighting a legal battle with the Bush Environmental Protection Agency to establish the principal that states can introduce laws on tailpipe emissions of carbon dioxide, under the California Clean Car Law passed in 2002. Sacramento wants to impose a 30 per cent cut in emissions per kilometre travelled by 2016. But the Bush EPA has insisted that there are no special effects of carbon dioxide particular to California, so it has no jurisdiction. That veto should fall with the Bush administration.

But the new plan goes beyond tailpipe emissions standards, laying out a broad range of measures aimed at cutting overall state CO2 emissions by 15 per cent by 2020. That is the equivalent of a 30 per cent cut from business as usual, or a return to 1990 levels. It is a task made more daunting by the fact that the state’s population in 2020, swelled by migrants, is expected to rise from 27 million in 1990 to 45 million by 2020, an increase of two-thirds.

The steps to be taken are far-ranging. The centrepiece is a state system for trading in permits to pollute – a so-called cap-and-trade system – that should be operational by 2012. It is aimed first at power generators and heavy industry, but will later by extended to include transport emissions, which make up 40 per cent of California’s total. If all goes to plan California could cover 85 per cent of total state emissions with cap-and-trade, which would take it ahead of the European system, which is currently the world leader.

In addition there are the tailpipe emissions standards, plus new fuel standards aimed at cutting the carbon emissions for every gallon of petrol burned by 10 per cent. This last will mostly be achieved through biofuel additives.

But attacks on vehicle emissions alone will not be enough, the state has concluded. They have to act directly against the state’s car culture as well. In the past decade, the number of vehicle miles travelled in California has risen by 3 per cent a year, more even than the 2 per cent annual rise in population. “People are driving more and that has to be stopped,” says state climate change PR man Stanley Young.

That means changes to land use planning, a function held by individual cities. State attorney general Gerry Brown has introduced a series of cash inducements aimed at bullying local planning authorities into cutting out urban sprawl and siting new housing close to mass transit systems. The moves have the backing of both environmentalists and housebuilders. The model is Portland, which has imposed a green belt to prevent sprawl and encouraged higher-density development in core areas.

The state is also planning new initiatives in public transportation, including spending $10 billion on a high-speed rail link from Los Angeles to San Francisco, eventually extending south to San Diego and north to Sacramento. There are also plans for a million “solar roofs” across the state and regulations covering emissions from trucks on the state’s highways and ships docked in state ports.

California does not burn much coal, but it does buy in a lot of electricity from out of state that is generated by burning coal. The cap and trade system, penalising the big carbon emitters, is aimed primarily to tackle that by providing the right incentives to have a third of the state’s electricity generated from renewable by 2020.

The state will use its buying power too. The biggest single purchaser of power in California, using more than 3 per cent of electricity, is the state program to pump water to Central Valley irrigators. “Currently that is coal fired, mostly from out-of-state. From 2012, when that contract ends, it will be from renewables,” says Mike Scheible, deputy executive officer at the ARB and, at 23 years, its longest-serving staff member. But such changes won’t always be easy, he says. The Los Angeles water and power department has a contract for coal-fired electricity from Utah that runs until 2027.

State legislators believe that the new rules will make California the largest market in the world for renewable sources of electricity like solar and wind power. They estimate it will stimulate the purchase of some 17,000 megawatts of renewable generating capacity by 2020 and provide tens of thousands of “green collar” jobs.

And a new breed of green industrialists is lining up to take advantage. Many of them are funded by billionaires who made their fortune in Silicon Valley. In Palo Alto, I met solar power entrepreneur David Mills, who spent more than a decade at the University of Sydney developing his ideas on generating electricity by heating water with the power of the sun. Two years ago, frustrated by government indifference, he shipped out to California. “It has a state plan for renewables; it has the technologists to deliver and it has the venture capital,” he says.

His backers in Silicon Valley have pumped tens of millions of dollars into helping him build a robot-run factory in Las Vegas. With Bush in the White House, Mills and his rivals haven’t been able to get power companies to buy the kit, however. He has a deal with Pacific Gas and Electric, California’s largest power company, for a 180-megawatt solar thermal plant to supply peak-load electricity from two square kilometres of desert. PG&E also has deals with two other solar thermal companies. But construction is on hold because state utilities regulators haven’t been prepared to sanction investment in solar plants without long-term arrangement for tax credits for renewable so far denied by Washington legislators and the Bush White House. The new administration in Washington should break that logjam.

Meanwhile, the state has other plans. California was one of the pioneers of wind power thirty years ago. Since then, it has stalled while Europe took the lead. But now it wants to grab back the initiative, by going offshore. All the talk in recent months has been about drilling for oil offshore, in California and elsewhere. But in Sacramento they think there is more wind power than oil to be had off the California coast. The wind that drives its famous surf could also drive its power stations. A study by Stanford civil engineer Michael Dvorak last year found a number of good windy, shallow-water sites for offshore wind farms, along the lines of those being developed in the North Sea in Europe.

Some sectors of state industry back the AB32 plan with its opportunities for new businesses. Tutt says: “We have a long history of environmental leadership supported by our business community. They know that they profit in the end.”

In September, when I sat in on a meeting of the California Air Resources Board’s Global Warming Economic and Technology Advancement Advisory Committee, which included representatives of leading state industrialists, there was no acrimony, just a determination to make it work effectively.

But others are less sanguine. The California Chamber of Commerce is among organisations voicing opposition. “They are gearing up to raise a ruckus,” said one state official, “particularly against the current background of economic turmoil.”

At the Air Resources Board they remain gung ho, however. Last month, the state published a report predicting that the measures would be broadly beneficial to the state economy, increasing economic productivity by $27 billion by 2020, primarily through improved energy efficiency, while creating 100,000 jobs. Mary Nichols, chair of the Board, said the financial crisis effected neither the plans nor their profitability.

Not all industrialists agreed. The California Manufacturers Technology Association called it “long on wishful thinking but short on economic reality.” In Stanford University, I discussed this with Jim Sweeney, director of the Precourt Institute for Energy Efficiency and an adviser to governor Schwarzenegger on energy issues. He said he thought the board’s predicted benefits were a tad optimistic, but saw no great harm being done. And if there is federal backing for similar measures from the new administration, then the optimistic prognosis could prove correct.

One unresolved issue is how much “offsetting” of emissions to allow. In other words, will polluters be able to meet some of their obligations to reduce emissions by investing in carbon-cutting technologies outside the state? “For us the bottom line is whether this is beneficial to the state,” says Scheible. Since the ARB thinks green technology will be good for the state’s economy, the general answer will be no. “We want investment in California industry,” he says.

But other parts of the state administration seem more in favour of offsets. California has a traditional of joint environmental action with state and municipalities across the border in northern Mexico, and Tutt says these may be extended to include carbon offsets. “The idea of some offsets is generally accepted”, she says. Especially because the state wants to see action to reduce emissions and increase sinks from on agriculture and forestry, and Mexican offsets would be one way of achieving that.

And she points out that Pacific Gas and Electric, the state’s largest power utility already has a programme encouraging its customers to offsets their emissions: “it would be crazy to outlaw that.” The scoping plan suggests a limit on offsets at 10 per cent of the total compliance obligation.

The detail of how this all plays out will undoubtedly in the end depend on policies framed in Washington, and how they mesh with international negotiations set to conclude late next year. But California remains the place where the US pioneers its environmental laws, especially on air pollution. Soon it may be leading the world. •

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