Featured Articles

Sep 06, 2010

• Forecast & Analysis -
• Top News Stories -
• Financial -
• Releases -
• Weather

EMISSION CRITICAL:Resistance Grows To California Climate Plan

Feb 05, 2010

By Cassandra Sweet
Of DOW JONES NEWSWIRES


SAN FRANCISCO (Dow Jones)--Less than a year before the nation's most aggressive rules to fight climate change are due to take effect in California, resistance against the plan is growing as the state struggles with recession and unemployment.

As part of a 2006 program to combat climate change, a cap-and-trade market for carbon dioxide and a clampdown on CO2 emissions from vehicles are set to start up on Jan. 1 of next year. But the state is groaning under a $20 billion deficit and unemployment stands at 12.4%, leading some politicians and business groups to press for a delay in implementation of the new rules, which they say are too costly and will drive industries out of the state. With federal climate policy stalled in the Senate, and with politicians jockeying for position ahead of November's state elections, obstacles to the tough new rules are multiplying.

"We have yet to see a full economic analysis as to how the cap and trade program will affect the economy," said Brenda Boleman, policy advocate at the California Chamber of Commerce. "We're not sure how cap and trade will impact jobs, in either direction."

One state legislator has introduced a voter initiative that would halt the cap-and-trade program until unemployment falls below 5.5%, a call that has found support among the two leading Republican candidates aiming for Gov. Arnold Schwarzenegger's job. Earlier this week, oil refinery and trucking groups sued state officials over a related climate law rule called the low-carbon fuel standard, which requires fuel manufacturers to cut the "carbon intensity" of fuels sold in California 10% by 2020. The Chamber and other mainstream business groups have stopped short of calling for a delay in California's climate rules, but have implored regulators to carefully consider costs as they complete a delayed review of the plan's economic consequences.

Schwarzenegger, State Attorney General and former governor Jerry Brown, and other state officials back the emissions-cutting policies, saying they will drive growth of California's renewable energy and clean technology industries, and help create many new, "green" jobs. A 2008 study by University of California, Berkeley, economist David Roland-Holst suggests California's climate law and the large-scale conservation it would bring could increase the Gross State Product by up to $76 billion, boost household incomes by up to $48 billion and create more than 400,000 new jobs.

Not everyone is convinced.

Republican State Assemblyman Dan Logue is sponsoring the ballot initiative to suspend the climate law until unemployment drops, arguing that proceeding with the regulations during a recession could be economically catastrophic. California's existing regulations and relatively high energy prices already have driven businesses to other states with lighter regulation, Logue said.

"This is not the time to experiment with global warming laws; it's a time to put families back to work," he said.

California Insurance Commissioner Steve Poizner and former eBay Inc. (EBAY) chief executive Meg Whitman, both running for governor on the Republican ticket, have also called for suspending the state's climate law.

Meanwhile, in lawsuits filed in federal court, the National Petrochemical & Refiners Association, the American Trucking Association and ethanol groups Growth Energy and the Renewable Fuels have asked the court to overturn California's low-carbon fuel standard saying the rule violates the interstate commerce clause of the U.S. Constitution.

The NPRA said the standard, adopted by the state's Air Resources Board last April, will make it more difficult to import and use transportation fuels in California that are produced outside the state. The ethanol groups say the regulation unfairly discriminates against corn-based ethanol by assigning it a higher so-called carbon footprint than more advanced cellulosic ethanol and other types of biofuels.

ARB Chair Mary Nichols said the low carbon fuel standard will help break dependence on fossil fuels, save consumers up to $11 billion over a decade and cut greenhouse-gas emissions.

While it's impossible to predict the chances for success of the climate law suspension proposal, recent state and national surveys by the Public Policy Insitute of California and the Pew Research Center have found a majority of people are more concerned about the economy and jobs than in climate change.

(Cassandra Sweet writes about energy and environmental markets from San Francisco. She can be reached at 415-439-6468 or cassandra.sweet@dowjones.com.)