California is two steps ahead on climate rules proposed by EPA

June 2, 2014 9:53 PM PT

reporting from WASHINGTON — When California launched its landmark global warming law in the final years of the George W. Bush administration, it was a risky act of defiance from a state frustrated by federal inaction on climate change.

Now, the federal government is trying to catch up — and that could position the state to cash in on its energy policy gamble.

California’s laws are stricter than the Environmental Protection Agency rule, formally proposed Monday. The EPA would require the nation’s power plants to cut carbon dioxide emissions 30% by 2030 from 2005 levels.

If the rule is finalized in its current form next year, California can easily adhere to it. In addition, other states are likely to clamor for California’s help.

That could translate into more than just vindication for former Gov. Arnold Schwarzenegger and the other politicians who built California’s system. It could also mean an economic lift.

“This is a great moment for us,” said Mary Nichols, a longtime climate warrior who is overseeing implementation of the state’s program as chairwoman of the California Air Resources Board. “Our goal has always been to make California a leader and help push action by the federal government.”

Nichols rattles off the ways California could benefit from the Obama administration’s ambitious push.

The most obvious is through an expansion of the fledgling trading market for carbon pollution credits at the core of California’s program. The state has been eager to see the market grow, because the bigger it gets, the cheaper clean energy is likely to be for the state’s businesses.

There are also less direct potential benefits.

“When it comes to energy management, energy efficiency, the use of communication technologies for energy purposes, there are a whole array of homegrown industries here” that were started as a result of environmental laws, Nichols said.

California’s many solar firms are among the businesses that see opportunities to expand if other states scramble to shift their energy strategies to renewable sources.

“California made the initial down payment on this industry and now they’re positioned well to benefit economically as the market grows around the country,” said Rhone Resch, chief executive of the Solar Energy Industries Assn.

Amid the EPA-inspired hunt for more clean energy, California’s massive industrial-scale solar plants in the desert could be tapped by more states, experts said.

All the benefits are points of pride for some in California, where lawmakers were warned the global warming law would sink its economy as businesses fled to states that did not restrict carbon emissions.

“Those other states now need to meet these targets,” said Severin Borenstein, director of the University of California Energy Institute. “It is good news for California.”

Most experts caution, however, that the EPA intends to give states wide latitude in how they meet the targets. It is possible California’s neighbors could pursue strategies incompatible with the state’s policies.

“It is really hard to know from what has been announced today how the states are going to respond, beyond a bunch of them just filing lawsuits to try to stop this,” Borenstein said.

Even before the EPA announcement, California laid the groundwork for cooperation through an energy partnership with other Western states and the Canadian province of British Columbia. State officials hope the EPA rule will persuade its partners to join California’s “cap and trade” market.

The market is the state’s system for rewarding firms that reduce greenhouse gas emissions and penalizing those that don’t.

Expanding the market would present new trading opportunities and thus drive down the costs for energy. So far, only the Canadian province of Quebec has joined with the state.

If California can lure others, experts say, its energy prices will probably drop.

At the California Energy Commission, officials were pleased to see energy efficiency play so prominently in the EPA’s 645-page plan.

California has spent billions of dollars in efficiency technologies, and voters recently approved a tax increase that will inject an additional $550 million annually into the programs. The projects have ranged from the mundane to the far-out, including one grant to the inventor of a foot warmer.

That is another area in which the state’s policies have been criticized as wasteful and potentially damaging to the economy. Boosters of the programs have long countered that they are helping California cut energy costs while incubating new businesses.

The EPA proposal, said Robert Weisenmiller, chairman of the California Energy Commission, will allow the state to further leverage its position as a pioneer.

“As the rest of the country pivots toward what we are doing, it provides business opportunities for our firms,” he said.

Not all Californians are so bullish, however.

Rep. Paul Cook (R-Yucca Valley) calls the EPA plan “another example of this lawless administration side-stepping Congress and over-regulating the American economy.” He is vowing to work to block it, along with other California Republicans.

But the state’s most prominent Republican, Schwarzenegger, won’t be among them. He signed California’s landmark global warming law, AB 32, in 2006 and considers the state’s climate policies as perhaps his biggest accomplishment as governor.

In a statement Monday, Schwarzenegger said he was eager to see California’s system “serve as a national model to help our country achieve the president’s goals.”

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Times staff writer Tiffany Hsu in Los Angeles contributed to this report.