Sacramento’s Kyoto

Whether California meets its emission reductions is not so important as how lawmakers intend to do so.

Darren Bernard

California’s newest environmental law shows what happens in an election year when political parties cannot agree on details: They avoid them.

The Global Warming Solutions Act is the truce brokered between Republican Gov. Arnold Schwarzenegger and Democratic legislators over how to best confront climate change. The law, agreed to last week, will require California to reduce greenhouse gas emissions to 1990 levels by 2020. As for the implementation, policing, and operational specifics – those are left up to a state regulatory board. Whatever details come out of the deal, the law’s sweeping objective is the same as the U.N.’s Kyoto Protocol. Gov. Schwarzenegger has avoided linking the law to Kyoto, even though the California bill calls for similar across-the-board greenhouse gas reductions within a similar timeline.

In February, a year after Kyoto came into effect, European nations announced they are – not surprisingly – widely off-target to achieve their 2012 objectives. The EU environment commissioner used the announcement – again, not surprisingly – to blame America.

In fact, Kyoto was a poor treaty to begin with, which makes the move in Sacramento all the more bewildering.

In a state plagued by electricity shortages and outrageous utility prices, some assemblyman must have said to another assemblyman, “We have a wildly over-regulated business environment. Now, how can we make it worse?”

To be fair, the California bill may be a win in the long run. Reducing emissions means reducing energy usage, and reducing energy usage means reducing energy dependence and exposure to market volatility.

But the new law wasn’t labeled a “job killer” for nothing. The costs of doing business in California just went up, not to mention the complications. European nations are not failing to meet their Kyoto obligations out of sheer bad luck. A country’s (or a state’s) emission restrictions act as market distortions that reduce gross domestic product growth and increase unemployment – particularly if the cost of moving business elsewhere is low. That is the inevitable and unenviable trade-off.

For this very reason, the European Union created the Emissions Trading Scheme, under which industrial firms can buy and sell pollution credits to make Kyoto requirements more cost-feasible.

Smartly, California is expected to create something similar.

At the behest of the governor’s office and business lobbyists, the state government will likely set up an emissions cap-and-trade system, which would let the market – instead of Sacramento – dictate how California polluters achieve the mandated reductions. The problem is the final bill does not explicitly require this, so whether and how this happens is up to the state’s 11-member, governor-appointed Air Resources Board,and therefore the political prowess of Schwarzenegger himself.

California’s energy scheme has another redeeming point. Because the United States has not experienced a serious energy crunch since the 1970s, solar power generation, biofuel gas, and other “green” technologies are still largely underdeveloped and prohibitively expensive. Sacramento’s requirements give both businesses and state lawmakers initiative to either make existing green power more affordable or develop new clean technologies.

What the law does not provide is the money or direction to do this. Last month, Schwarzenegger and British Prime Minister Tony Blair signed a pact to “share ideas and information” on green fuels and technologies. This is when you know politicians are serious – they are willing to talk.

Still, the agreement is a step above anything the federal government has done, and it gets at the fact that science is the best way to achieve energy independence and cut emissions. Brazil realized this in the 1970s and embarked on a three-decade Manhattan Project to turn sugarcane ethanol into a viable alternative to gasoline. Notwithstanding the transition pains, Brazil will be independent from foreign oil production by 2007, with a booming energy industry that could fuel export growth for years.

The take-away is that Brazil’s success hinged upon a clear scientific mission to explore and develop oil alternatives. And so far that’s something California – and the greater United States – does not have.

Unfortunately, until cleaner technologies are created, the developed world will need to make real economic sacrifices in the name of energy independence and climate change.

Schwarzenegger has signed up for the challenge. But, again, whether California meets its emission reductions is not so important as how lawmakers intend to get there. If Sacramento can meet its emissions goals without compromising growth and employment figures, other states will sign up for similar policies. If not, the environmental movement gets another black eye, and America gets “Terminator 4.”

Darren Bernard welcomes comments at [email protected].