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California Climate Policy: Good for the Environment, Good for Business

Posted: 10/20/11 05:04 PM ET

By Ann Carlson and Dan Emmett

Every major meteorological organization in the world agrees that 2010 was the hottest year on record, continuing a dangerous trend. Texas is experiencing the worst drought in its history. Lack of rain has created massive food shortages and human catastrophe on the horn of Africa. Glacial melting is causing a sea level rise that will threaten coastlines and hundreds of millions of people worldwide. Yet the globe continues to pour heat trapping greenhouse gases into the atmosphere in record amounts and U.S. policy to reduce domestic emissions is virtually dormant.

But California is bucking the national trend. While the rest of the nation does little to combat climate change, California is showing the country -- indeed the world -- how to craft sophisticated climate policy that will cut greenhouse gas emissions while spurring technological innovation and energy efficiency. The California Air Resources Board (CARB) is expected to vote tomorrow to finalize an economy-wide cap-and-trade program that will put the finishing touches on an ambitious and thoughtfully designed plan to roll back the state's greenhouse gas emissions to 1990 levels by 2020. The board's actions are the final step in implementing AB 32, the state's landmark clean energy law, championed by both Republican and Democratic governors and resoundingly endorsed by the state's voters in 2010 when they rejected Proposition 23.

We believe that not only has the state embarked on sound environmental policy but that CARB's plan will provide an important signal to California businesses that investments in clean energy and energy efficiency have the support of the state. We are already clean technology leaders. That leadership pays real economic dividends: we lead the country in venture capital financing for clean energy, receiving more than half a billion dollars in investments in the second quarter of this year alone. With the full implementation of AB 32, investments should accelerate as the state lets investors, businesses and inventors know that it is committed to a strong clean energy economy.

The cap-and-trade program is one part of a broader, comprehensive policy that includes: a renewable portfolio standard requiring the state's utilities to invest in clean energy like solar and wind; targets for energy efficiency that reduce energy use while saving consumers money; standards for cleaner fuels; and tough auto efficiency standards that are now part of national policy. The cap-and-trade program provides businesses with needed market stability by making emitters of dirty fossil fuels pay the price for the environmental harms they cause. Many will choose instead to move away from using dirty fuels, shifting to alternative clean energy, reducing energy usage through the installation of energy efficiency measures and figuring out innovative solutions to reduce and eliminate carbon emissions without restricting economic growth. By harnessing market forces the cap-and-trade program will promote innovation in the clean tech sector, allowing investors to determine how best to cut greenhouse gas emissions at the lowest cost.

Experts at the Emmett Center on Climate Change and the Environment at UCLA School of Law have carefully evaluated whether the state's proposed cap-and-trade program is well-structured and designed to avoid market gaming and manipulation. After all, we don't want a new form of market exchange that can cause the kinds of abuses that led to the 2008 housing crisis. They concluded that CARB has done an excellent job structuring the cap-and-trade program to maximize transparency and liquidity, two crucial components of a well-functioning market. They've made several recommendations for strengthening the program even further and CARB is already acting on some of those recommendations. No system is foolproof, but we think the chances of market abuse are minimal.

With the adoption of all of the components of California's climate change policy, we believe CARB will cement the state's place as one of the world's leading locales for clean tech innovation and investment as well as the home of the country's most efficient mainstream and cutting edge businesses. But California has always been willing to share its successes in environmental policy and we hope that the implementation of AB 32 will show the rest of the country that effective policies to reduce greenhouse gases are smart for the environment and smart for business.

Ann Carlson is the Shirley Shapiro Professor of Environmental Law and the Faculty Director of the Emmett Center on Climate Change and the Environment at UCLA School of Law. Dan Emmett is founding principal and Chairman of the Board of Douglas Emmett, Inc., a real estate investment firm based in Santa Monica.

 
 
 
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This user has chosen to opt out of the Badges program
07:38 AM on 10/22/2011
I have two unrelated (to each other) comments about this. First, CARB is awful and should be abolished. Secondly, I wonder if we're going to lose jobs over this.
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08:32 PM on 10/20/2011
Let's see. Cap and trade is riddled with fraud and wasted money across Europe, but the Feed in Tariff for homeowners who produce clean, non-wilderness-killing, GHG-free power on their homes and businesses is an enormous ecological and economic success. So which one does CA go after? ARGH!

Where are our PACE loans and generous feed in tariffs? All we need to hugely, HUGELY clean up our climate, air, water, and economy by improving property values and creating jobs while keeping wealth IN COMMUNITIES that is currently being sucked out by Big Energy. Plus, unlike Chevron Solar and BP Wind, and Sempra Transmission, local solar/efficiency doesn't slaughter wilderness and deplete water nor does it monopolize the sunshine that hits every rooftop across California every day.

Cap and trade is a complete stinker, just like Big Solar and Big Wind and Big Transmission - a boondoggle to benefit the exact people who are melting our planet and our economy. Big Banks and Big Energy are the problem - they will never be the solution.
Linus521
In wildness is the salvation of mankind
06:43 PM on 10/20/2011
So California, the biggest concrete jungle in the nation is going to devour more of our ecosystems for the new alternatives. The new alternatives are only effective if they are constructed where people actually live. Each home should be made energy efficient; however, killing more and more ecosystems and killing our biological diversity, the strands in the web of all life, only kill the Earth's ability to create and sustain all life.

Scouring the natural Earth for any reason, literally kills that much of the planet. Also, the energy yielded will have to be piped into where people actually live, so more raping of Earth. Obama is killing southwestern ecosystems for dead solar panel fields, pushing many threatened species of biological diversity closer to extinction and killing those ecosystems.

Can a windmill or solar panel release oxygen, naturally regulate the climate, balance the gaseous composition of the atmosphere and sequester C02 and methane? Once the soil is disturbed and the vegetation deforested, for the destruction of these "clean energies", the sequestered heat trapping gases will be released back into the atmosphere. Deforestation of our terrestrial ecosystems heats up and dries out the climate, and plants dead weeds that have no role or jobs in any ecosystem in America.
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08:32 PM on 10/20/2011
Thanks Linus, as always, you are on the right side.
05:33 PM on 10/20/2011
Great piece, I completely agree. While Washington sits on its hands, California cheerfully welcomes the billions of dollars venture capitalists are investing here to develop the new clean technologies the rest of the world is buying.
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Hamburger Time
Outright Terror, Bold and Brilliant
05:22 PM on 10/20/2011
Danish Professor Henrik Svensmark explaining the link between cosmic rays the solar magnetic field and cloud cover influencing climate on Earth
http://vimeo.com/14356185

John Coleman, co-founder of The Weather Channel, claims Anthropogenic Climate Change is a myth.
http://www.youtube.com/watch?v=S7ZtGx-5lJU

Der Spiegel claims Global Warming responsible for *drop* in Sea water levels.
http://www.spiegel.de/wissenschaft/natur/0,1518,782324,00.html
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Hamburger Time
Outright Terror, Bold and Brilliant
05:45 PM on 10/20/2011
Meanwhile, genuine global environmental disasters continue unabated
http://www.infiniteunknown.net/tag/japan/
http://www.youtube.com/watch?v=GTvWZI10nAc
This user has chosen to opt out of the Badges program
08:35 PM on 10/20/2011
yeah, there is a "conservative" sect of the Catholic Church that still claims Galileo was wrong and that the sun rotates around the earth:

http://articles.chicagotribune.com/2011-07-04/news/ct-met-galileo-was-wrong-20110704_1_modern-church-universe-splinter-group

same thing...
04:56 PM on 10/20/2011
California's leadership should be applauded - our 1,200 small and mainstream business members support ARB's adoption of cap and trade, and forward movement to implement AB 32.
04:49 PM on 10/20/2011
Great article.