- Strict targets for heavy industry, electric utilities and refineries to cut greenhouse gas emissions by 25% by 2020.
- Prohibiting all state utilities from signing long-term contracts with coal fired power plants.
13 Jul 2006 - California Gets Primed To Enact Greenhouse Gas Limits
By Mark Golden
Of DOW JONES NEWSWIRES
SAN FRANCISCO(Dow Jones)-- is likely to enact two laws in the next two months that together would go far beyond anything any other state has done to address global warming. California
Though details are still being worked out, the Democrat-controlled state legislature is expected to pass the bills when it reconvenes in August. One bill would force
's heavy industry, electric utilities and refineries to cut greenhouse gas emissions about 25% by 2020, the level in 1990. The other bill would effectively prohibit all of the state's utilities from signing long-term contracts for baseload power generated by coal-fired power plants, at least until such plants operate with equipment still under development to control carbon dioxide. California doesn't have any coal-fired plants, but its utilities get much of their power from coal plants in other states. California
Though the proposals could be substantially rewritten by the end of August, people involved in the process expect Republican Gov. Arnold Schwarzenegger to get bills on his desk that he can, and will, sign. Schwarzenegger, who faces re-election in the fall, has staked a claim to a national leadership position on the issue of combating global warming. While the bill on coal-fired plants is seen as almost a sure thing, sponsors of the broader greenhouse gas bill are still in talks with Schwarzenegger's staff.
"While not a done deal, the odds are good that the cap on emissions will pass both houses," said Jim Marston, head of state global warming efforts for the national group Environmental Defense. "We're making progress."
The 1990-level emissions cap would be the toughest greenhouse gas requirement nationwide, Marston noted. The limits on long-term contracts with coal-fired plants would match the most aggressive actions to date by some northeastern states.
Companies Fight For Changes
"These bills together or separately would be historic," said Wendy Pulling, director of environmental policy for PG&E Corp. (PCG), which is fighting for changes to both bills. PG&E, like Edison International's (EIX) Southern California Edison, would prefer action on global warming to happen at the national level, though PG&E recognizes
's leadership role on environmental issues. Still, the utility opposes the emissions cap bill unless it is amended to ensure there's a market-based approach. In addition, PG&E and other companies that have already voluntarily cut their emissions of greenhouse gases, want to ensure they get credit for that. California
Proponents of the measures say
must lead the way in the face of the federal government's inaction on mandatory reductions of greenhouse gases. California
Assembly Bill 32, the "Global Warming Solutions Act of 2006," is sponsored by Assembly Speaker Fabian Nunez, D-
, and Assemblymember Fran Pavley, D-Santa Monica. It matches the goal Schwarzenegger set in an executive order last year of reaching 1990 emission levels by 2020. Los Angeles
The governor is pushing for significant changes to Nunez's bill, which was approved by the Assembly and is now in the state Senate. Schwarzenegger wants an explicit commitment to a market for emission allowances. Also needed is "an economic safety valve" to make sure the plan doesn't hurt the state's economy, said Linda Adams, the governor's Secretary for Environmental Protection.
The bill has only loose commitments to these ideas, but the outlook for a compromise is positive.
"AB 32 could be an important tool in meeting the governor's aggressive greenhouse gas targets," said Schwarzenegger spokesman Bill Maile. "The administration is working closely with Speaker Nunez, Assemblymember Pavley and other key stakeholders to make sure the governor gets a bill he can sign into law."
Opponents See High Costs
The governor's office hasn't taken a public position on the other bill, which would prohibit new long-term contracts for power from plants that pollute more than a new, natural gas-fired plant. That bill mostly puts into law administration policies that are currently being implemented by regulatory agencies.
Both bills are opposed by some business groups. The California Manufacturers and Technology Association says that such a drastic cap on emissions would drive businesses and jobs from
to other states or countries. As a result, greenhouse gases may not be reduced much globally, said Joseph Lyons, CMTA's policy director for Energy. California
The cap on emissions, "is going to be devastating, especially for oil refineries, the cement industry and electric power generation," said
. "It's going to increase energy costs in Lyons ." California
The CMTA is also opposed to the prohibition on utilities signing long-term supply contracts for power from older, dirtier power plants. Even coal-fired plants with cutting-edge technology won't be able to meet that standard, said
. He added that the restriction would lead to higher electric bills. Lyons
PG&E, Schwarzenegger and others say new technologies would sufficiently clean up coal-fired plants to meet the standard.
The California Chamber of Commerce opposes the bills and has formed a coalition with some farm and other groups to assess what the 1990 emission cap would cost the
Supporters of the laws argue that the state's economy will benefit by putting
at the forefront of combating climate change. The state's technology companies, according to environmental groups and several California Silicon Valleycompanies, will develop products that will be sold around the world to reduce emissions.
Good Faith Talks
The state's Democratic leadership and the governor are negotiating in good faith, rather than using the issue as a campaign weapon, people in the legislature, the governor's administration and industry said.
"My impression is that all the parties are open to a dialogue," said PG&E's Pulling, echoing the comments of others interviewed. "We're working with both the governor's office and the speaker's office."
If the laws are enacted, proponents hope that other states will follow
's lead. "A whole lot of other states will start following suit," said Marston. California
To make it to the governor's desk, the bills must be voted out of committee and passed by both houses by August 31. The governor has until the first week of October to sign or veto bills passed by the Legislature.
-By Mark Golden, Dow Jones Newswires; 415-765-6118; Mark.Golden@dowjones.com
(END) Dow Jones Newswires
July 13, 2006 15:20 ET (19:20 GMT)
Copyright (c) 2006 Dow Jones & Company, Inc.