If you want to see how policy and elections can either drive or derail renewable energy deployment one should pay attention to the political activity in California. Since the 1970s, California has been the leader among states as it relates to the development of policies to encourage the use of renewable energy, and this election year will be pivotal for California and the country on that front. On November 2nd Proposition 23 will be on the California’s ballot as an initiated state statute, and if approved it would suspend Assembly Bill 32 otherwise known as the Global Warming Act of 2006 (“the Act”). The Act, which is California's landmark clean air legislation, was passed by a Democratic Legislature and Republican Governor Arnold Schwarzenegger and requires that greenhouse gas (“GHG”) emission levels be cut to 1990 levels by 2020. The Act was scheduled to take effect in 2012 and is an example of state and regional GHG emission regulation developed in the absence of a national Congressional policy on the topic.
Should Proposition 23 be approved by voters it would suspend the Act’s provisions until California's unemployment rate drops to 5.5% or below for four consecutive quarters. The chances of that occurring any time soon would be extremely difficult given that California's unemployment rate is currently around 12% and it has only been at 5.5% or below for four consecutive quarters three times in the past three decades. California’s unemployment track record suggests the advocates favoring Proposition 23 are aiming to bury rather than delay the Act. If approved, Proposition 23 also requires California to abandon implementation of comprehensive greenhouse-gas-reduction program that includes increased renewable energy and cleaner fuel requirements, and mandatory emission reporting and fee requirements for major polluters such as power plants and oil refineries, until suspension ends.
As you would expect, California voters are eco-friendly and recent polls are showing more than half say the state should not wait for the economy to improve before cutting GHG emissions which scientists argue lead to the creation of Global Warming. What has made the outcome of Proposition 23 unpredictable is that the opinions of the California business community are split. Proposition 23 has been bankrolled by oil and gas companies and groups representing manufacturers and small businesses who are opposed to the onerous mandate that they say will cost billions and lead to job loss at a time that the state (and country) can least afford it. On the flip side, environmental and public health groups, large high-tech business such as eBay, Google and other high-tech executives from the Silicon Valley Leadership Group (those heavily invested in the state’s renewable and efficiency industries) are fighting the initiative. As a result of the conflict in California’s business community the state chamber of commerce remains neutral on the repeal question.
Because the next Governor of California, as required under the Act, has the power to suspend the Act regardless of whether the initiative passes, Proposition 23 has also become a factor in California’s gubernatorial election. Meg Whitman, former eBay President and CEO, is the Republican candidate and has said that she would move to freeze the Act for a year or more. Jerry Brown, the state’s attorney general and former governor, is the democratic candidate and has said he would support "adjusting" some features of the Act but that he generally supports it and would not suspend it. Both gubernatorial candidates are against Proposition 23.
Given that the advancement of the renewable energy economy, the environment and public health are all at stake it is not hard to understand why Californians are engaged in the policy and political arenas and eagerly await next month’s vote outcomes on both the global warming ballot initiative and the gubernatorial race. However, if California votes to bury its climate law, be forwarned the outcome could also impact decisions of politicians in other states and push back prospects of national action on climate change for many years to come. The California issue will be interesting to watch unfold if for no other reason than to better understand how policy can help or hurt renewable energy deployment.© MICHAEL BEST & FRIEDRICH LLP