Global Cooling in the Golden State
Experts debate the new California state law aimed at combating global warming.
By Bruce Murray
The nation’s leading state in traffic congestion, population growth and sunbathing is now poised to become a world leader in the fight against global warming.
The California Global Warming Solutions Act of 2006 (Assembly Bill 32) mandates that the state reduce its greenhouse gas emissions to 1990 levels by 2020. This, despite the fact that California will be well on its way toward re-doubling its population by then.
The pros and cons, realities and unrealities of AB 32 were top of the discussion at the Oct. 12 National Energy Symposium in Sacramento.
AB 32 is a landmark for California and marks a dramatic departure from national policy, especially in light of the U.S. rejection of the Kyoto Protocol aimed at reducing greenhouse gas emissions worldwide. Some believe AB 32 is a fool’s errand; others believe it is an essential beginning of a national policy shift to address the problem of global warming.
“California is in an unusual and interesting situation in that it is pushing the envelope in a way that is not being pushed at the federal level,” said Stanford Professor James L. Sweeney, the keynote speaker at the Symposium.
Much of the regulatory detail is left out of the legislation and instead is placed in the hands of state agencies and future legislation. Just how the legislation works itself out in the real world is unknown, and will likely happen over the next three to five years.
“AB 32 is only a framework, but a framework with teeth,” Sweeney said. “The legislative mechanisms are designed to protect the environment while at the same time not harming the economy. But implementing AB 32 will be a tremendously difficult challenge over which people will have vastly different views.”
It takes a village to combat global warming.
Former California State Assemblyman Joseph Canciamilla (D-Contra Costa County) said an underlying motivation in AB 32 is to set an example for the rest of the nation and the rest of the world. If California can do it, so can other states and other countries – so goes the logic.
“The intent of this legislation, as with earlier legislation dealing with auto emissions, is to drive the national agenda,” said Canciamilla, whose term expired following the Nov. 7, 2006 elections.
Although California is the largest economy among the 50 states, California alone cannot stop global climate change and should not be under any illusion that it can do so, experts at the symposium stressed.
“What we do in California is not gong to make much difference if we don’t get involvement from other states and around the world,” said Robert Sawyer, former chairman of the California Air Resources Board. (Gov. Arnold Schwarzenegger fired Sawyer in June in a murky squabble over the state's compliance with the federal Clean Air Act.)
Canciamilla, although he voted for AB 32, has many reservations about it. “The key problem, in our quest to set the national example, is that we do not sacrifice the California economy and turn over control of the state’s economy to administrative agencies that are oftentimes staff-driven,” he said. “There are a lot of hooks in this bill that give me concern regarding the long-term health of California.”
Much of the regulatory authority of the legislation is put in the hands of the California Air Resources Board, which heretofore has not been responsible for the kind of regulation AB 32 mandates.
“Our traditional responsibility is air quality and public health, and this will remain our number one responsibility,” Sawyer said. “Reducing green house gases fits in with our mission because we regard greenhouse gasses as air pollutants.”
Sawyer said his agency will work closely with the California Public Utilities Commission and the California Energy Commission over next several years to implement the legislation. In addition, Sawyer said he will need to expand his staff by 100-150 people to handle the task.
“We will go to experts in developing a market-based plan. These things should always be based on good science and good technology,” he said.
Sweeney said a major debate in the coming months in years is the type of regulations the agencies set up – whether they are “command and control” requirements such as emissions caps; or market-based economic incentives such as emission vouchers that can be bought and sold.
“Where can we apply market-based solutions? Or where do you need micro-incentives, or where do you need command and control? These will be the fundamental difficult challenges that we’re all going to have to face,” Sweeney said.
Sawyer said he will favor market incentives rather than command. “We will set up regulatory market based mechanisms that will make sense and be efficient,” Sawyer said.
World Energy Demand
Nationwide, oil and natural gas consumption has a nearly unbroken record of growth for the past 100 years – with the exception of two years when the supply was disrupted by war. (See Professor Nathan Lewis’s Power Point presentation, slide 54.)
Although energy consumption is becoming more efficient – people use less energy on a per capita basis – demographic trends are counteracting gains made in efficiency: The world population is expected to reach 10-11 billion people by 2050; so despite increases in efficiency, world energy demand is projected to at least double by the year 2050. (See Nathan Lewis’s Power Point presentation, slides 9-10.)
These trends hold true in California, where rapid population growth and the corresponding demand for energy could very well exceed any gains made in pursuit of AB 32.
“The number of people in California is growing so rapidly; unless we do something about the next doubling of the population in about 40 years, it is not good enough to have the per capita reductions in energy consumption,” Sawyer said.
Nonetheless, energy efficiency is a critical element in – if not reducing energy demand – reducing the growth in energy demand
“Any time you save energy, you save CO2,” Sawyer said. “First step [in fulfilling AB 32] will happen through improved efficiency. Efficiency, efficiency, efficiency.”
Electricity demand in California reached record levels during the summer heat wave of 2006. The California electricity system hit a record peak demand of 50,000 megawatts, and the Western states combined hit a peak of 150,000 megawatts, according to Jim Detmers, Vice President of Operations at the California Independent System Operator. By comparison, total electricity demand in China was 400,000 megawatts.
“Last summer, California accomplished an astounding feat: We met a tremendous growth in demand, and we were able to serve all of it; and we met all of the environmental requirements,” Detmers said.
AB 32 requires that the state Air Resources Board and the Public Utilities Commission develop greenhouse gas emission reduction standards for electricity generators and natural gas providers. Exact amounts are not stated in the legislation.
John Geesman of the California Energy Commission said meeting the goals of AB 32 are feasible the electricity-generating sector, but other energy sectors will have more difficulty.
“The reduction goals are achievable, but the means of getting there are likely to prove quite controversial and will go through a trial and error process before arriving at a successful mix of policies,” Geesman said. “We’ve already made substantial reductions over the last 30 years in electricity per capita consumption. We’ve accomplished that through a variety of incentive programs and regulations.”
Michael Zenker, managing director of Cambridge Energy Research Associates, said natural gas will be an important component of AB 32. Compared to coal, natural gas emits half of the carbon dioxide per unit of electricity generation. Natural gas is therefore attractive from a local environmental standpoint and from a greenhouse gas standpoint.
“We have heard about a lot of promising technologies that might be significant in 20 years. But gas-fired generation is the fuel of choice today,” Zenker said. “That being said, looking at the [growth] trends in California, you cannot meet AB 32 by relying on natural gas alone.”
Not in my Backyard
A drawback to natural gas is that it still has to be imported from other states and from abroad. And California has been reluctant to site liquefied natural gas facilities at its ports. Canciamilla said the NIMBY (not in my back yard) mentality is strong in California.
“We’re not going to allow LNG here, but it’s OK if you put it in Oregon or Baja, and we pipe it in. So we drive markets out of California. And we become more dependent on neighboring states and neighboring countries to provide a resource for us. But then we can have the comfort of not having it in our back yard,” Canciamilla said.
If California pushes power production and natural gas ports to neighboring states or Mexico, it will be doing nothing to combat global warming.
“California is not an island in the energy world,” Zenker said.
Geesman said California cannot pretend to wall itself off from other states. Power is traded across states, regions and the world.
“I am skeptical a single state market is going to prove practical. So tell that to the White House; tell it to Congress. If this takes a national solution, which most people think it does, let’s move quicker,” he said.
Meeting the goals of AB 32 will be more difficult for the transportation sector – which next to with electricity generation is the largest contributor of greenhouse gas emissions.
The transportation sector is fueled overwhelmingly by oil, and current alternative sources are problematic: Corn ethanol also produces greenhouse gasses; and the power necessary to charge electric or hybrid cars has to come from somewhere – usually coal or gas-fired plants.
“Ethanol from corn provides essentially no air quality benefit, and little to no greenhouse gas benefit,” said Daniel Sperling, director of the Institute of Transportation Studies at the University of California, Davis.
Sperling said the greatest opportunities for curtailing greenhouse gasses in the automotive sector are in improved efficiency. Over the past 20 years, vehicles have become about 1 percent more efficient each year. In another 20 years, cars could be another 20 percent more efficient.
But car-loving Americans tend to favor performance to efficiency. The spike in gas prices in early 2006 did not force all of the SUVs, trucks and other gas-guzzling vehicles off the road.
“If GM builds a 50 mpg car, that does not a guarantee people will buy it,” Zenker said. “Even with $3-per-gallon gasoline, people still bought relatively large, low mile-per-gallon vehicles. Fundamentally, policy-makers are reluctant to tell consumers they don’t have a choice; that they have to pay more.”
Canciamilla said it is highly unlikely legislators will risk their political future by imposing punitive incentives, like higher taxes on gasoline or SUVs.
“We are not prepared to tell the public they have to pay more. In fact, we’ll do just the opposite. We’ll say, ‘you can have all of these wonderful things; and like bonds, they are free. You don’t have to worry about it.’ But in reality what we do is construct a house of cards when it comes to paying the costs. We try to hide the real costs, so the consumer never really sees the bottom line. But when you keep putting layers upon layer of legislation and regulation, it all begins to cave in on itself.”
Trust us, we’re from the government.
Canciamilla is troubled by the fact that AB 32 leaves out the regulatory details, while putting the crafting of regulation in the hands of state agencies or subsequent legislation.
“We have a myriad of agencies dealing with these issues, but without any clear direction coming from any of them. The more agencies that are involved, the more confusion there is, and the more you [lobbyists] can influence decisions one way or another,” he said.
Canciamilla said AB 32 was a convenient way for politicians to posture themselves as warriors against global warming, but without thinking the whole process through.
“We are driven by the politics of constituents, and that is driven by what is on the front page of the paper. So now we can say, ‘We’re doing these great things; and oh by the way, we’re going to decide on the rules and how the money is going to be spent later down the road. Trust us.’”
Canciamilla pointed out that the assembly members who were in office during the 2000-01 energy crisis – and crafted legislation to solve the crisis – are about to face term limits, leaving no one in the legislature with hard experience in energy matters.
“Energy issues have not been at the top of the radar screen in the current crop of legislators. The legislature tends to be driven by the crisis du jour, and the crisis right now is not energy. During the early 2000s, it was all energy all of the time. Members who came in subsequently assumed it was over,” Canciamilla said. “We have floundered dramatically since energy deregulation, and the California legislative process is more dysfunctional.”
In 2002, the California State Assembly passed AB 1493, which sought to regulate greenhouse emissions from motor vehicles. But this law has ended up tied up in litigation.
“I hope this is not the fate of AB 32, but I would be naïve to think we could come up with something agreeable to everyone, and someone will not be unhappy,” Sawyer said.
As for the immediate future, “stay tuned,” Sawyer said. “AB 32 puts us into an entirely different arena. It is a major new direction.”
Originally posted October 30, 2006.