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A California Campaign with Global Consequences

Proposition 23 Puts Clean Energy in Danger

SOURCE: AP/Ben Margot

California Gov. Arnold Schwarzenegger, center, shakes hands with San Francisco Mayor Gavin Newsom after signing Assembly Bill 32, the Global Warming Solutions Act of 2006, in San Francisco. The bill is now under attack with Proposition 23.

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This November, California voters are in danger of undoing one of the most progressive pieces of environmental legislation ever passed.

Texas oil companies have taken advantage of California’s quirky initiative system to place Proposition 23 on the ballot. This proposition has one purpose: to undo California’s Global Warming Solutions Act (also known as Assembly Bill 32, or “A.B. 32”), which stands as a landmark piece of bipartisan clean energy legislation and is a model for federal action. A.B. 32 has catalyzed billions of dollars in private sector investment in clean energy in the state—creating jobs, businesses, and new technologies that are leading the nation toward a cleaner energy future.

Repealing the law would damage California’s clean energy economy, severely inhibit the functioning of the United States’ clean energy innovation engine, increase pollution and dependence on foreign oil, and harm chances for comprehensive federal action. Defeating Proposition 23 at the ballot box would be not only a victory for California but also one of the strongest messages California’s voters can send to Washington and the world that we the people have the will to beat Big Oil.

Assembly Bill 32 is a model of bipartisan clean energy action

The bipartisan Global Warming Solutions Act of 2006 was passed by a Democratic-controlled legislature with support from businesses, labor, environmental, and health organizations and signed into law by Republican Gov. Arnold Schwarzenegger. It established the first-ever mandatory reporting guidelines for global warming pollution, and set a statewide limit for carbon that will guide emissions back down to 1990 levels by 2020. This limit is implemented through a scoping plan that includes establishing a price for carbon in addition to tailpipe-emissions standards, a low-carbon fuel standard, building energy-efficiency standards, and a statewide renewable electricity standard of 33 percent by 2020.

The approach crafted by the state’s legislature and implemented by the California Air Resources Board resembles the strategy pursued by Sens. John Kerry (D-MA), Joe Lieberman (I-CT), and others in the U.S. Senate. Over the past three years this approach has helped thousands of clean energy businesses in California grow, invest billions of dollars in clean technology industries, and create hundreds of thousands of jobs.

The deceptive oil industry-funded repeal proposition

The effort to undermine California’s pioneering clean energy law recently qualified for the November ballot under the name “Proposition 23” thanks to a multimillion-dollar campaign funded by Texas-based oil giants Valero Energy Corp and Tesoro Corp, two of the top 10 biggest polluters in the state. The initiative would, in its own words, “Suspend State laws requiring reduced greenhouse gas emissions that cause global warming, until California’s unemployment rate drops to 5.5 percent or less for four consecutive quarters.”

The campaign has deceptively framed Proposition 23 a “jobs” initiative and used the word “suspend” rather than “repeal” to increase the initiative’s appeal to moderates. But a closer inspection reveals the deception. The initiative could mean permanent repeal of California’s landmark bipartisan clean energy law because unemployment has only been below 5.5 percent three times since 1970. The initiative’s sponsors are, of course, fully aware of this, but they have intentionally hidden their motives.

The oil companies funding the Proposition 23 campaign are turning the Global Warming Solutions Act into a scapegoat and blaming it for recent job losses caused by the recession. But the California Legislative Analyst’s Office found that the oil companies’ central argument that California’s climate policies have destroyed jobs contained “a number of serious shortcomings that render its estimates of the annual economic costs of state regulations essentially useless.” As we show below, California’s pioneering clean energy law has in fact spurred private investment and created thousands of new companies, jobs, and new patents. Repeal would cripple these emerging clean energy industries, resulting in lower, not higher, employment.

This is not the first time out-of-state corporate interests have attempted to “buy” a California ballot initiative for their own benefit. California’s unique political system means that anyone with enough money can deploy hundreds of canvassers to gather the necessary signatures to place a referendum on the ballot. Just this past spring, for example, Mercury Car Insurance Company spent $16 million on advertising and signature gathering to place Proposition 17 on the ballot. The initiative would have allowed car insurance companies in California to impose surcharges on certain motorists for virtually any reason, but it was defeated at the polls in the June 8 California election. Proposition 23 should meet a similar fate.

Proposition 23 would increase pollution, dependence on foreign oil, and household energy costs

Make no mistake: While the Texas oil companies are selling the repeal initiative as if it is a good deal for the economy, the repeal is really just good for them. Proposition 23 would let polluters off the hook for the harm their emissions do to surrounding communities and the environment, and it would also put California back on the path of ever-increasing dependence on ever-more-expensive energy.

The American Lung Association shows that poor air quality contributes to 19,000 premature deaths, 9,400 hospitalizations, and 300,000 cases of respiratory illness each year in California alone. The Global Warming Solutions Act of 2006 works to lower emissions of both greenhouse gasses and toxic pollutants, resulting in hundreds of fewer premature deaths each year in California. Repealing the clean air law would allow big refiners and power plants to continue polluting as before.

Since California’s major sources of pollution are most likely to be located in low-income neighborhoods and near communities of color, Proposition 23 would disproportionately affect those least able to cope. According to a University of Southern California study, the five smoggiest cities in California also have the disproportionately live near facilities emitting toxic air pollution. Proposition 23 would make all of California’s air dirtier, but it would hit communities of color and the poor the hardest.

California’s aggressive energy independence policies also have put the state on a path to reduce its imports of foreign oil, which translates into lower energy costs and less price volatility. But Proposition 23 would eliminate many of these beneficial policies, handicap California’s efforts to become energy independent, and strap California’s economy to the inexorable rise of fossil fuel prices.

Proposition 23’s passage would make electricity 33 percent more expensive in California by the end of this decade, according to a study recently published by a noted University of California economist. This increase in energy costs would cost the state $80 billion in gross domestic product and destroy half a million jobs by 2020, and that doesn’t even include the $20 billion in GDP growth and 100,000 new clean energy jobs California will create in the next 10 years if the Global Warming Solutions Act can be protected.

Repeal would destroy clean energy businesses and jobs and harm the economy

The success of California’s Global Warming Solutions Act, like the Regional Greenhouse Gas Initiative in the Northeast, gives us concrete evidence that a price for carbon pollution can effectively create jobs by spurring new markets for energy efficiency and clean energy technologies like wind and solar. California’s progressive clean energy policies have given investors and entrepreneurs the long-term market certainty they need, and as a result private investment has been pouring into California’s clean energy economy.

“California’s Global Warming Solutions Act is like a job-creation machine for California,” says Van Jones, Center for American Progress Senior Fellow and former green jobs advisor to President Barack Obama. “Why would Californians let some Texas oil companies come into their state and smash their job creation machine just to protect their profits?”

California’s clean energy sector has continued robust growth despite the economic recession thanks to the Global Warming Solutions Act. Clean energy jobs have grown 10 times faster than the statewide average since 2005, to over 125,000 today. And green jobs grew by 5 percent even when the state experienced an overall job loss of 1 percent between 2007 and 2008. Likewise, venture capitalists have invested over $9 billion in clean energy innovation in the state since 2005, supporting the growth of over 12,000 clean energy businesses and thousands of new patents. Venture capital is one of the fastest and more effective ways to stimulate economic growth, creating by some estimates 2,700 new full-time jobs for each $100 million invested—or about six times more jobs per dollar than direct federal spending.

Passing Proposition 23 would severely damage these emerging clean tech industries that have been major job creators despite the recession. The initiative would suspend the crucial price signal and market for carbon pollution that makes clean energy more profitable than dirty energy, and it would also threaten 72 other planned and existing state policies that are linked to it along with billions of dollars in direct investment in clean tech investment by the state and local governments.

This would create regulatory chaos for California’s businesses and drive private investment and jobs out of the state or into bankruptcy. The following are just some of the many job-creating policies that would be threatened by Proposition 23:

  • The renewable electricity standard
  • Solar hot water incentives that help families heat their homes
  • The million solar roofs initiative
  • Cash for appliance clunker programs
  • Government green building policies
  • Combined heat and power incentives and standards that are among the most cost-effective energy efficiency policies on the books
  • Low-carbon fuel standards
  • Light-duty and heavy-duty vehicle emission standards and incentives
  • Sulfur-hexafluoride, perfluorocarbon, and methane reduction standards
  • Oil and gas extraction and distribution emissions reductions
  • Urban runoff management and other water conservation standards
  • Sustainable forest targets
  • Gas capture and flaring standards for landfills, refineries, and large dairies
  • Green schools programs
  • Clean ships and clean ports programs

Eliminating these policies would undercut thousands of clean energy businesses and their workers who have built their futures based on the premise that California would be a place where clean energy was profitable energy. As the nonpartisan California Legislative Analyst’s Office says, repeal of California’s clean energy policies would “dampen additional investments in clean energy technologies or in so-called ‘green jobs’ by private firms, thereby resulting in less economic activity than would otherwise be the case.”

Repeal would damage the nation’s engine of energy innovation

California has been a leader in clean energy and energy efficiency for decades. Over the past 35 years California’s model energy efficiency policies have saved consumers over $56 billion, creating 1.5 million full-time jobs and $45 billion in payroll. And since 2006, the Global Warming Solutions Act has been an “incubator of innovation,” according to Google CEO Eric Schmidt, leading to “new job creation in many sectors as business responds to the need for energy-efficient buildings, transportation and a growing portfolio of renewable energy resources.”

California has become a critical nexus of innovation for our national clean energy economy because of its strong clean technology sector. For instance, in 2007 California’s clean energy innovators patented over 1,400 new technologies, roughly a fifth of the nation’s total. Over 600 investment firms have put money into California’s clean energy economy, supporting more than 12,000 innovative clean energy businesses. Even in the chilly investment climate of 2009 these clean energy businesses saw $2.1 billion in venture capital investment, which comprised 60 percent of all such investment in North American—all thanks in part to the Global Warming Solutions Act.

Proposition 23 would endanger our nation’s entire engine of clean energy innovation since California is such an important piece of the national clean energy economy.

As Barack Obama said in his state of the union address this year, “the nation that leads the clean energy economy will be the nation that leads the global economy.” Across the country and across the world it is these emerging industries that are leading the way out of the recession toward sustainable 21st century economic growth. In fact, clean technologies could represent a nearly half trillion dollar export market in the coming century, according to the World Wildlife Foundation.

Yet CAP’s recent report “Out of the Running?” reveals that the United States risks being left behind in these new technology sectors by countries such as Germany, Spain, and China, who have comprehensive climate and clean energy policies in place. Implementing the Global Warming Solutions Act is adding the state of California to the list of economies that are seizing this multibillion-dollar energy opportunity, but only if the law is protected from short-sighted repeal efforts like Proposition 23.

As California goes, so goes the world?

There is an old saying that says “as California goes, so goes the nation.” This is a reference to the fact that California, with the largest population and largest economy of any American state, often sets an example for the rest of the nation by passing policies later adopted by the federal government. But action taken by California’s voters this November could actually determine the fate of the clean energy economy across the world, not just the nation.

President Obama made a commitment in Copenhagen last December that the United States would lead the world toward a multilateral agreement to reduce global warming pollution. Our national credibility is in jeopardy if we cannot meet it. California’s leadership in passing the Global Warming Solutions Act of 2006 created hope that Congress might soon muster the courage to enact the comprehensive clean energy and climate legislation needed to meet this commitment. Passing Proposition 23 in California this November would make it easier for lobbyists in Washington to convince our representatives once again to put Big Oil’s profits ahead of our economy, national security, and environment.

What’s more, the Global Warming Solutions Act has created a large market for new clean energy technologies, jumpstarting innovation across the state and the nation even in the absence of federal climate legislation. If our representatives in Washington can’t figure out how to price carbon and declare independence from Big Oil on a federal level, perhaps forward-thinking states and regions can band together to make a difference on their own.

An analysis by Point Carbon showed that a combination of existing regional and state-level climate change policies including California’s Global Warming Solutions Act and the Northeastern States’ Regional Greenhouse Gas Initiative could achieve the equivalent of 41 percent of the United States’ pollution reduction commitments under the Copenhagen Accord while driving $100 billion in state-level clean energy investments. That wouldn’t be enough to secure a global climate change agreement, but it’s a foundation we cannot afford to lose.

Our need to declare independence from dangerous and dirty fuels has never been clearer. Millions of gallons of crude continue to gush into the Gulf of Mexico from BP’s blown-out oil well, and every day we stay addicted to fossil fuels dangerous countries such as Iran grow richer by the millions. California’s landmark clean energy policies are helping build a future free from tar-stained beaches, tragic rig and mine worker deaths, devastated marine habitats, harsher droughts, stronger storms, and rising seas.

No one state can solve these problems alone, but the world is looking to the United States to show leadership, and Congress is looking to California. The Global Warming Solutions Act points the way to a cleaner, safer, more secure energy future. Californians can help ensure that the nation and the world will follow by defeating Proposition 23 at the ballot box in November.

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Araceli Ruano is a Senior Vice President and the Director for California and Sean Pool is the Special Assistant for the energy team at American Progress. For more of CAP’s policy proposals in this area please visit the energy and environment page on our website.

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