California Voters Preserve the State’s Law Combating Global Warming

Summary:  Voters in California overwhelmingly defeated a ballot referendum that would have suspended the state’s law that combats global warming, in the election of November 2, 2010.  As a result, the law, the Global Warming Solutions Act of 2006, remains in effect.  The Act establishes the level of greenhouse gas emissions that occurred in the year 1990 as the goal, and mandates reducing the use of fossil fuels sufficient to attain that level by the year 2020.  The Act, and this referendum defeat, are especially significant in the present political environment, since the U. S. Congress has been unable to pass any legislation regulating emissions of greenhouse gases that exacerbate global warming.

Introduction.  In a previous posting on this blog, the campaign surrounding this ballot referendum, Proposition 23, was described. Proposition 23 on the ballot for November would have suspended the provisions of California’s AB 32 (2006), the "Global Warming Solutions Act" until unemployment falls below 5.5% or less for four quarters in a row.  Specifically, it would have suspended the statutory mechanisms established in the Act to reduce greenhouse gas emissions to levels prevalent in California in 1990 by the year 2020.  The unemployment rate in California has been in the range of 12% during 2010.  It was last at 5.5% or less during October 2005 through June 2007.  It is not likely to fall back to those levels for some years.

The Global Warming Solutions Act.  In more detail, the Global Warming Solutions Act requires in part

(1)   monitoring and annual reporting of all major sources of greenhouse gas emissions;

(2)   accounting for greenhouse gas emissions arising in particular from the generation of electricity used in the state, whether generated within or outside the state;

(3)   establishing the level of greenhouse gas emissions that occurred in 1990 and assuring that greenhouse gas emissions be lowered to that level by 2020;

(4)   establishing rules and regulations by Jan. 1, 2011, by means of public hearings and taking into account the technological feasibility and cost-effectiveness in order to achieve the Act’s objectives, for electricity generation, petroleum refining and fuel supplies, subject to exclusions for small businesses whose emissions fall below a level to be determined; and

(5)   affording the option of adopting regulations that establish a market-based system with successively lower annual limits to greenhouse gas emissions in order to achieve the objectives of the Act.

Current progress and the status of implementing the Act may be accessed here.  It’s generally understood that a market-based system in item (5) will be a cap-and-trade market mechanism, whereby successively lower maximum limits for emissions are established periodically, and rights to emit those levels are traded on an open market.

Donors Supporting the Referendum Initiative (seeking to suspend the Act).  According to records of the California Secretary of the State, a group called “California Jobs Initiative, A Coalition Of Taxpayers, Employers, Food Producers, Energy, Transportation And Forestry Companies” received donations of over $7,806,000 from out of state oil companies such as Valero, Tesoro Companies, Flint Hills Resources (owned by the oil billionaires, the Koch brothers), Occidental Petroleum, the National Petrochemical and Refiners Association, and other oil companies, as well as the Howard Jarvis Taxpayers Association (active in many California ballot initiatives to limit taxation), and the California Trucking Association (presumably a major consumer of oil products).  Thus, in spite of the referendum’s language seeming to be concerned with the plight of unemployed workers in California, the true interests behind the referendum appear to be oil companies.

Opponents of the Referendum Initiative (seeking to preserve the Act).  A large number of organizations is listed as opposing the Referendum.  The umbrella organization is called "Californians for Clean Energy and Jobs".  George Shultz, the former U. S. secretary of state during the Reagan administration, was the honorary co-chairman of the organization.  A large number of health organization, labor unions, organizations of African-Americans and of Latinos, municipal chambers of commerce, and alternative energy and technology associations all came out opposing the referendum.  Additional opponents included Gov. Arnold Schwarzenegger, now governor-elect Jerry Brown, his opponent Meg Whitman, U. S. Senators Barbara Boxer and Diane Feinstein, AARP, the League of Women Voters , the Union of Concerned Scientists, the Natural Resources Defense Council, the Sierra Club, and many others.  Major donors opposing the referendum include Thomas Steyer, Hedge Fund Manager, Farallon Capital Management; the National Resources Defense Council; the National Wildlife Federation; Ann and L. John Doerr (LJD is an investment partner with Al Gore); and the Environmental Defense Action Fund.  As of late October 2010, opposing groups had raised over $35 million.

The Referendum Initiative was Defeated by an overwhelming vote of 39% in favor, 61% opposed.  This is a resounding affirmation of the public’s understanding that global warming is a significant phenomenon adversely affecting the state’s economic and individual welfare, and that alternative sources of energy must be supported and developed.

Alternative Energy is Being Actively Promoted in California.  The state’s air quality regulator, the California Air Resources Board, adopted regulations requiring electric power generators to provide one-third of their power to California from alternative or renewable sources by 2020 .  This new requirement was handed down as part of the state’s mandate to meet the requirements of the Act.  This is an ambitious target, requiring major new investments in both generating capacity and new transmission lines.  Unfortunately, however, according to an analyst from the Union of Concerned Scientists, by working with a cap-and-trade regime, the Act would actually allow utilities to meet these requirements by purchasing greenhouse gas allowances from outside the state.  This would nullify a significant feature of the Act’s objective.

More generally, however, regions in the state are actively courting new construction for the manufacture of clean energy facilities (e.g. the Sacramento region).  Presumably this is why such a large number of municipal chambers of commerce opposed the Referendum.

Conclusion.  California’s voters acted resoundingly in support of efforts to combat global warming, and as an important secondary effect, in support of establishing new industries and enterprises statewide.  This new economic endeavor has the favorable result of providing new jobs for large numbers of workers in the state. 

California’s efforts complement those of many other states in the U. S.  The first was the Regional Greenhouse Gas Initiative http://www.rggi.org/home , a consortium of the six New England States plus New York, Pennsylvania, Delaware and Maryland.  In a common agreement, which nevertheless required favorable action by each state’s legislature and governor, the RGGI commits to reducing CO2 emissions from electric power generation sources by 10% by the year 2018.  RGGI operates by a cap-and-trade auction mechanism.  It does not cover CO2 emissions from transportation, nor from space heating and cooling.

These state and regional initiatives demonstrate the capability of the people of America to begin combating global warming in the absence of national energy policy originating from Congress and the executive branch.  In view of the imperative to eliminate use of all fossil fuels as soon as possible , these developments are significant first steps.