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What D.C. Can Teach California -- and Vice Versa -- About Putting Together a Climate Bill

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It's been a hard couple of weeks for those who deny the existence of climate change. As storms rage on the East Coast, cutting out power to hundreds of thousands of consumers, and as wildfires threaten huge swaths of the Western states, new evidence has emerged that sea levels are steadily rising and will continue to -- albeit more slowly -- even if we take strong action to cut emissions.

With these facts at hand, it seems like folly to continue denying that the planet is warming and that we need to do something about it. You'd think the country would be running, not walking, toward a smart energy strategy -- a new course that diversifies our energy base, reducing the impact of blackouts, and produces energy with far fewer carbon emissions so we'd at least begin to address the long-term impacts of climate change.

Unfortunately, as I wrote in my last blog post, many of our national politicians have yet to hear the call to action, even as their D.C.-area homes are battered by heat waves and thunderstorms.

But the fact that Congress is reluctant to curb climate change today doesn't mean there's nothing to learn from Washington when it comes to smart energy policy. Three years ago, Congress did move forward with an historic bill to cap carbon emissions, known as the American Clean Energy and Security Act, or ACES.

Those of you who follow the ins and outs of energy legislation know that ACES, which passed the House in an historic vote on June 26, 2009, failed to get traction in the Senate, and we haven't seen an alternative climate bill in Congress since. But that doesn't mean there aren't lessons to be learned from the work that led to the final House vote.

Now that California is moving forward to implement its own historic climate bill, known as AB32, it's the perfect time to look back to the lessons learned in 2009 and see how those might play out in California. Of particular importance in California is the question of how to spend the anticipated revenue from the program, which will be anywhere from $660 million to more than $3 billion in the 2012-13 budget cycle alone. For guidance, we need some idea of how the federal bill allocated revenues to different sectors of the economy, including consumers, carbon-intensive industries, and innovators.

With this in mind, I went to D.C. last week to meet privately with some of the critical negotiators on ACES from the political, advocacy, and business worlds. I wanted to get a sense of how those negotiations played out -- what alliances were made, what surprised the negotiators, and what lessons could be gleaned for our work implementing AB32.

What ensued was a spirited discussion of the best way to use AB32 revenues to ensure implementation of the law that's efficient, smart, equitable and effective. Here's what I learned:

1. Energy Efficiency, Energy Efficiency, Energy Efficiency: One theme that echoed throughout the meeting was the need to spend as much revenue as possible on energy efficiency, to maximize greenhouse gas reductions, minimize impact on consumers and create the most positive benefits for consumers and industry. In particular, industrial efficiency -- making industrial facilities, like manufacturing plants, more energy efficient -- saves significant money and makes those industries more competitive in the long run.

2. Support Emerging Technology: After energy efficiency, participants were most focused on the need to spend some of the AB32 revenue on technology development -- both early research and development and also deployment. There was a lot of discussion about the right kind of program to implement here, but everyone agreed that in California, in particular, it's very important to support emerging clean tech industries.

3. Don't Forget About Low-Income Consumers: A number of participants emphasized the critical importance of helping consumers with their energy bills. This is one area that's harder in California than it was under ACES, because in California we're constrained by the so-called "Sinclair Paint" test, which requires that the revenues must be spent on activities that directly advance the original purpose of the bill -- in this case, lowering carbon emissions. One way to stay within the test but still provide targeted help to consumers might be to give vouchers for energy efficient appliances or vehicles. Whatever the mechanism, helping consumers is a critically important piece of the puzzle.

4. Keep it Local: Finally, there was a constant refrain in the room that funds should be spent as locally as possible, so Californians can see the benefits of the legislation in their communities.

I boarded my plane back to California with renewed excitement, that out here, we're actually implementing an historic climate bill, not just talking about how to pass one. I'm also even more aware of just how important it is that we do it right -- not just for Californians, but for everyone else who's watching and waiting and counting on California to get it right.

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