08 Mar 2012: Report

California Takes the Lead
With New Green Initiatives

Long ahead of the rest of the U.S. on environmental policy, California is taking bold steps to tackle climate change — from committing to dramatic reductions in emissions, to establishing a cap-and-trade system, to mandating an increase in zero-emission vehicles. The bottom line, say state officials, is to foster an economy where sustainability is profitable.

by mark hertsgaard

California, long America’s environmental trendsetter, is about to push the envelope once again. On May 1, the state will hear from some of the nation’s largest insurance companies about the financial risks climate change poses, not only to the companies but also to their customers and investors. Some 300 firms, representing the vast majority of the U.S. insurance industry, are expected to reply to a survey that includes such questions as “how do you account for climate change in your risk management?” and “has the company altered its investment strategy in response to [climate change]?” The companies’ replies will then be posted on the California Insurance Commission’s website for all to see, including regulators from all 50 states and overseas.

“What all of us will learn is the extent to which companies are incorporating climate risk as they make investment decisions, underwriting decisions and business operations decisions,” Dave Jones, the California insurance commissioner, told Yale Environment 360.

Jones emphasized that the survey is “not prescriptive.” But analysts predicted the exercise “will inevitably cause the [insurance] industry to do things differently,” in the words of Andrew Logan of Ceres, a group of investors and NGOs that helped develop the survey. “What [insurance companies] choose to cover and not to cover, and what they invest in, has
California’s law commits the state to cut greenhouse gas emissions by 80 percent by 2050.
great influence over individual and corporate behavior.”

The insurance initiative is but the latest example of California’s far-reaching policies to confront climate change. On Aug. 15, the state will sponsor its first auction of emissions allowances, as mandated by the Global Warming Solutions Act passed in 2006. Often referred to as AB 32 (for Assembly Bill 32), the law commits California to reduce its greenhouse gas emissions to 1990 levels by 2020 and to cut them 80 percent by 2050, the amount scientists say is necessary for there to be a reasonable chance of limiting global warming to 2 degrees Celsius above pre-industrial levels.

To achieve these reductions, AB 32 relies largely on cap-and-trade, the same mechanism Republicans in Congress derided as “cap-and-tax” when they rejected President Obama’s climate legislation in 2010. California’s law caps the amount of greenhouse gases a given economic sector may emit at 90 percent of the previous year’s emissions. Companies then bid for emissions allowances, with the price established by an electronic auction. Those companies that subsequently cut emissions by more than required can trade their excess allowances to those that do not cut enough. The auction, scheduled for August, will include power plants, refineries, and cement plants, which must begin cutting emissions in 2013. Emissions cuts for manufacturers of transportation fuels begin in 2015.

California Governor Jerry Brown, a Democrat, is counting on the auctions to raise $500 million a year — welcome funds for a state government in chronic budget deficit. But the California Air Resources Board, which administers the cap-and-trade program, projects that revenues could easily be twice as large. “We project $550 to $1 billion during the 2012-2013 fiscal year, and that’s on the basis of a price of $10 per share, which is very conservative,” said David Clegern, a board spokesman. “The futures market is currently at $18 per share.”

The state’s goal, Clegern said, is not only to reduce emissions but to foster an economy where sustainability is profitable. Ken Alex, a senior policy
California already has the most aggressive renewable portfolio standard in the U.S.
adviser to Governor Brown, argues that such an economy is already taking shape in California, in part due to the policies of Brown’s predecessor, Republican Arnold Schwarzenegger. The “Million Solar Roofs” program, which began under Schwarzenegger but will “reach completion” under Brown, has reduced the price of photovoltaic solar power units by 30 to 60 percent, said Alex, who noted that “the companies installing them are the fastest growing in the state.”

California already has the most aggressive renewable portfolio standard in the U.S.; it requires 33 percent of the state’s electricity to be generated from renewable sources by 2020. California is ahead of schedule to meet that target, Alex asserted, thanks not only to the Million Solar Roofs program but also the installation of 4,242 megawatts of large-scale solar plants in the deserts in the southern part of the state. Governor Brown “has said 33 percent should be a floor, not a ceiling, and we need to think about how we get to 40 percent and even 50 percent,” according to Alex.

California is also poised to transform its vehicle fleet, which in turn promises to bring greener cars and trucks to the U.S. as a whole. As directed by AB 32, the Air Resources Board has required automakers to increase the amount of so-called Zero Emission Vehicles [ZEVs] — electric cars, hybrids, hybrid-electrics and hydrogen-fueled vehicles — sold in California by 15 percent by 2025, as board chair Mary Nichols explained in an interview with Yale Environment 360. This policy is projected to reduce greenhouse gas emissions by 52 million tons a year by 2025, the equivalent of taking 10 million cars off the road. Clegern emphasized that the new regulations were adopted after close consultation with the world’s automakers. “After years of fighting us about our regulations, [automakers] are coming to realize there’s a big market [for ZEVs],” said Clegern.

If history is any guide, California’s vehicle policies will have a powerful ripple effect. Seatbelts, unleaded gasoline, and hybrid vehicles are but some of the
If history is any guide, California’s vehicle policies will have a powerful ripple effect elsewhere in the U.S.
vehicle innovations that spread throughout America after being introduced in California. In the 1960s, choking under the worst smog in the nation, California got federal approval to start setting its own, tougher clean air standards. Automakers fought California’s efforts to require catalytic converters and other cleaner technology on cars sold in the state, but they eventually surrendered and even added the technology to all the cars they produced.

Why? Because California was, and remains, the single largest auto market in the U.S., accounting for 10 percent of new vehicle sales. The logic of efficient manufacturing dictated that “you can’t make one car for California and another car for Washington, D.C.,” Eron Shosteck, a spokesman for the Alliance of Automobile Manufacturers, pointed out.

California’s decision this year to require insurance companies to disclose climate risks promises to have a similarly out-sized impact, especially since New York is joining California in the initiative. “Most insurers operating in the United States are operating in those two markets, and therefore need licenses from us,” commissioner Jones explained. Washington state is also requiring insurance companies to disclose these risks.

“I expect,” said Ceres’ Logan, “this information will change how [companies] model and price risk, what new products they might develop — for example, to incentivize low-carbon behavior — what kinds of investments they will make and not make, and how they operate in the public sphere, including government lobbying.”

What is it about California that enables it to do so much more about climate change than the other 49 states, not to mention the federal government? Being the ninth-largest economy in the world helps. As the zero-emission-vehicle and insurance cases illustrate, California’s market is so sought-after that companies accept more stringent regulations to access it. But what else explains why the rules in California are tougher than elsewhere?

Matt Rodriquez, the state’s Secretary for Environmental Protection, said he believed it is partly because many Californians, including policymakers, came to the state in the first place “because of its natural beauty and resources”
California’s politicians understand that the state’s voters value green policies more than party labels.
and thus want them protected. The continuity between the climate policies of governors Brown and Schwarzenegger illustrates how the environment is less of a partisan issue in California; Republican and Democratic politicians alike understand that voters value green policies more than party labels. “Even though there may be a variety of political viewpoints, we share the goal of preserving our agricultural land, our forest lands, maintaining a good quality of water, and preserving the California way of life,” explained Rodriquez.

In fact, if the rest of the United States had done what California has over the past 40 years, the world might be well on the way to slowing climate change. For in that case, the U.S. today, like California, might be consuming the same amount of energy as it did 40 years ago. And, like California, the U.S. might now be preparing to build major high-speed rail and hydrogen-vehicle infrastructure. What’s more, the international community might have had a better chance of reaching a deal at the Copenhagen climate conference in 2009, because the U.S. might have embraced rather than shunned the goal of 80 percent emissions reductions by 2050.

But the policies of the rest of the U.S. and of the global community worked out differently, and even California is not immune to the consequences: The Golden State is going to get hit very hard by climate change. Scientists project that California will inevitably lose much of the snowpack atop the Sierra Nevada — the source of one-third of the state’s fresh water — by 2050 because of rising temperatures. California will also face at least 1 meter of sea level rise by 2100 (and perhaps much sooner) — enough to put underwater the San Francisco and Oakland airports, as well as the Port of Long Beach, unless adaptation measures are undertaken.

MORE FROM YALE e360

California’s ‘Clean Car’ Rules
Help Remake Auto Industry

California’s ‘Clean Car’ Rules Help Remake U.S. Auto Industry
With the passage of strict new auto emission and air pollution standards, California has again demonstrated its role as the U.S.’s environmental pacesetter. In an interview with Yale e360, Mary Nichols, chairwoman of the California Air Resources Board, explains how her state is helping drive a clean-car revolution.
READ MORE
California is not yet ready for these and other climate impacts, Secretary Rodriquez noted, but it is getting ready. Already, California has published the most advanced climate adaptation plan of any state in the nation. Released in 2009, the plan outlines the projected impacts in considerable detail and urges planners, businesses, and ordinary citizens to begin preparing now. The next step, coming this spring, is the release of adaptation policy guidelines — state reports that will give advice on what specific changes should be considered for water supply, land use, infrastructure, and other policy areas.

How much it will cost California to adapt to climate change is unknown. “There is no single budget for adaptation,” said Ken Alex, of the governor’s office. “Part of adaptation is insuring that as we build out our 21st century infrastructure, we make sure that adaptation is built into everything state does — from high-speed rail to water systems to coastal planning to emergency services to, well, everything.”

POSTED ON 08 Mar 2012 IN Biodiversity Business & Innovation Climate Policy & Politics Policy & Politics Africa North America 

COMMENTS


One thing I would note is that the article says that AB32 "relies largely on cap and trade", which is actually not correct. According to the California Air Resources Board (CARB) only about 16 percent of the reductions are expected to come through emissions trading, with the rest from a suite of other regulations such as clean car standards, a low carbon fuel standard, renewables, etc.

Posted by Tim Juliani on 08 Mar 2012


California operates precariously with chronic state budget deficit spending – today projected at $15 billion. California Governor Jerry Brown's current budget proposal includes almost $500 million in spending from the theoretical revenues of California's unprecedented carbon cap-and-trade climate regulations.

These regulations were enacted as California’s Global Warming Solutions Act of 2006. Commonly referred to as AB 32, the law established the goal of reducing greenhouse gas emissions to 1990 levels by 2020 exclusively in California. Opponents have referred to AB 32 as a costly, unnecessary, job-killing carbon tax. Brown’s bet to offset one-half billion dollars in future state deficit spending raises questions about the reality of sufficient climate tax revenues and the propriety of Brown’s budget backfill climate bet.

Reuters (Feb.16, 2012) reports it unlikely that Governor Brown would get a fraction of the revenue for the state budget from an untested cap-and-trade carbon tax program. The non-partisan California Legislative Analyst's Office said Brown's plan "likely overestimates the magnitude of potential General Fund relief" from the proposed carbon tax revenues.

Brown claims that the state will have $1 billion at its disposal in the next fiscal year from the cap-and-trade regulations, which begin in 2013. The governor's plan assumes $500 million of the revenue will be used to offset the state general fund's costs, and remaining revenue would be used for new or expanded regulations to cut greenhouse gas emissions in California. Brown has even suggested that some of these projected revenues could help fund the fanciful $100 billion, 510-mile long, San Fran-to-L.A., High-Speed Rail Project.

The brief and inglorious history of risky reliance upon economic benefits from new green energies or new climate control regulations shows nothing but failures – monies badly spent both in the government and private sectors, and in both U.S. and international economies. The frontiers of new technologies and gratuitous green regulatory initiatives have proved perilous -- especially during our historic global economic slowdown.

ECOPOLITICS

Posted by Paul Taylor Examiner on 08 Mar 2012


"In other news, California government officials have identified 3 remaining sectors of the economy that appear to function. Steps are now being taken to rectify that oversight."

Posted by Shoshin on 09 Mar 2012


Where are your sources that CA is using the same amount of energy as it was 40 years ago?

Posted by Andy on 21 Aug 2012


Comments have been closed on this feature.
mark hertsgaardABOUT THE AUTHOR
Mark Hertsgaard has covered climate change since 1989 for outlets ranging from The New Yorker, Vanity Fair and Time to NPR, L'espresso and The Nation, where is the environment correspondent. Currently a Fellow of the New America Foundation, he is the author of six books that have been translated into 16 languages, including, HOT: Living Through the Next Fifty Years on Earth, released in paperback this month.

 
 

RELATED ARTICLES


UN Panel Looks to Renewables
As the Key to Stabilizing Climate

In its latest report, the UN's Intergovernmental Panel on Climate Change makes a strong case for a sharp increase in low-carbon energy production, especially solar and wind, and provides hope that this transformation can occur in time to hold off the worst impacts of global warming.
READ MORE

New Satellite Boosts Research
On Global Rainfall and Climate

Although it may seem simple, measuring rainfall worldwide has proven to be a difficult job for scientists. But a recently launched satellite is set to change that, providing data that could help in understanding whether global rainfall really is increasing as the planet warms.
READ MORE

Scientists Focus on Polar Waters
As Threat of Acidification Grows

A sophisticated and challenging experiment in Antarctica is the latest effort to study ocean acidification in the polar regions, where frigid waters are expected to feel most acutely the ecological impacts of acidic conditions not seen in millions of years.
READ MORE

UN Climate Report Is Cautious
On Making Specific Predictions

The draft of the latest report from the Intergovernmental Panel on Climate Change warns that the world faces serious risks from warming and that the poor are especially vulnerable. But it avoids the kinds of specific forecasts that have sparked controversy in the past.
READ MORE

Should Universities Divest
From Fossil Fuel Companies?

Student and activist groups have been urging universities to take a stand against climate change by divesting from companies that produce oil, natural gas, or coal. In a Yale Environment 360 debate, activist Bob Massie makes the case for divestment as a necessary tool in pushing for action on climate, while economist Robert Stavins argues it would be merely symbolic and have little effect.
READ MORE

 

MORE IN Reports


Mining Showdown in Andes
Over Unique Páramo Lands

by chris kraul
High-altitude neotropical ecosystems known as páramos are increasingly at risk in Colombia and elsewhere in South America as major mining companies seek to exploit rich deposits of gold and other minerals. Such projects, scientists warn, could have serious impacts on critical water supplies.
READ MORE

Unsustainable Seafood: A New
Crackdown on Illegal Fishing

by richard conniff
A recent study shows that a surprisingly large amount of the seafood sold in U.S. markets is caught illegally. In a series of actions over the last few months, governments and international regulators have started taking aim at stopping this illicit trade in contraband fish.
READ MORE

A Public Relations Drive to
Stop Illegal Rhino Horn Trade

by mike ives
Conservation groups are mounting campaigns to persuade Vietnamese consumers that buying rhino horn is decidedly uncool. But such efforts are likely to succeed only as part of a broader initiative to crack down on an illicit trade that is decimating African rhino populations.
READ MORE

On Fracking Front, A Push
To Reduce Leaks of Methane

by roger real drouin
Scientists, engineers, and government regulators are increasingly turning their attention to solving one of the chief environmental problems associated with fracking for natural gas and oil – significant leaks of methane, a potent greenhouse gas.
READ MORE

Scientists Focus on Polar Waters
As Threat of Acidification Grows

by jo chandler
A sophisticated and challenging experiment in Antarctica is the latest effort to study ocean acidification in the polar regions, where frigid waters are expected to feel most acutely the ecological impacts of acidic conditions not seen in millions of years.
READ MORE

On Ravaged Tar Sands Lands,
Big Challenges for Reclamation

by ed struzik
The mining of Canada’s tar sands has destroyed large areas of sensitive wetlands in Alberta. Oil sands companies have vowed to reclaim this land, but little restoration has occurred so far and many scientists say it is virtually impossible to rebuild these complex ecosystems.
READ MORE

A New Leaf in the Rainforest:
Longtime Villain Vows Reform

by rhett butler
Few companies have done as much damage to the world’s tropical forests as Asia Pulp & Paper. But under intense pressure from its customers and conservation groups, APP has embarked on a series of changes that could significantly reduce deforestation in Indonesia and serve as a model for forestry reform.
READ MORE

In a Host of Small Sources,
Scientists See Energy Windfall

by cheryl katz
The emerging field of “energy scavenging” is drawing on a wide array of untapped energy sources­ — including radio waves, vibrations created by moving objects, and waste heat from computers or car exhaust systems — to generate electricity and boost efficiency.
READ MORE

Life on Mekong Faces Threats
As Major Dams Begin to Rise

by joshua zaffos
With a massive dam under construction in Laos and other dams on the way, the Mekong River is facing a wave of hydroelectric projects that could profoundly alter the river’s ecology and disrupt the food supplies of millions of people in Southeast Asia.
READ MORE

As Fracking Booms, Growing
Concerns About Wastewater

by roger real drouin
With hydraulic fracturing for oil and gas continuing to proliferate across the U.S., scientists and environmental activists are raising questions about whether millions of gallons of contaminated drilling fluids could be threatening water supplies and human health.
READ MORE


e360 digest
Yale
Yale Environment 360 is
a publication of the
Yale School of Forestry
& Environmental Studies
.

SEARCH e360



Donate to Yale Environment 360
Yale Environment 360 Newsletter

CONNECT

Twitter: YaleE360
e360 on Facebook
Donate to e360
View mobile site
Bookmark
Share e360
Subscribe to our newsletter
Subscribe to our feed:
rss


ABOUT

About e360
Contact
Submission Guidelines
Reprints

e360 video contest
Yale Environment 360 is sponsoring a contest to honor the best environmental videos.
Find more contest information.


DEPARTMENTS

Opinion
Reports
Analysis
Interviews
Forums
e360 Digest
Podcasts
Video Reports

TOPICS

Biodiversity
Business & Innovation
Climate
Energy
Forests
Oceans
Policy & Politics
Pollution & Health
Science & Technology
Sustainability
Urbanization
Water

REGIONS

Antarctica and the Arctic
Africa
Asia
Australia
Central & South America
Europe
Middle East
North America

E360 en Español

Universia partnership
Yale Environment 360 articles are now available in Spanish and Portuguese on Universia, the online educational network.
Visit the site.

e360 MOBILE

Mobile
The latest
from Yale
Environment 360
is now available for mobile devices at e360.yale.edu/mobile.

e360 VIDEO

Warriors of Qiugang
The Warriors of Qiugang, a Yale Environment 360 video that chronicles the story of a Chinese village’s fight against a polluting chemical plant, was nominated for a 2011 Academy Award for Best Documentary (Short Subject). Watch the video.


header image
Top Image: aerial view of Iceland. © Google & TerraMetrics.

e360 VIDEO

Colorado River Video
In a Yale Environment 360 video, photographer Pete McBride documents how increasing water demands have transformed the Colorado River, the lifeblood of the arid Southwest. Watch the video.

 

OF INTEREST



Yale