Californian Emissions Cap Move Draws Mixed Responses
Date: 01-Sep-06
Country: US
Author: Michael Erman and Bernie Woodall
California lawmakers were expected later Thursday to pass a bill that aims to cut greenhouse gas emissions to 1990 levels, or by about 25 percent, by 2020.
While some manufacturers criticized the bill, saying it could chase businesses out of the state, utilities -- who are responsible for about a fifth of California's greenhouse gas emissions -- had a mixed reaction.
"Financially, the bill should not have a painful effect on utilities because they've always been allowed to pass through the costs of any pollution-control investments," said Barry Abramson, a utility analyst at Gabelli Asset Management Inc.
"Their customers will pay the costs," he said.
The chairman and chief executive officer of PG&E Co. , parent of the state's biggest utility Pacific Gas & Electric Co., said he supports the new legislation.
"By combining market-based mechanisms and enforceable emissions reductions, this bill strikes the right balance between improving the environment and protecting the economy," PG&E CEO Peter Darbee said.
Southern California Edison (SCE), part of Edison International, said it supports the legislation but "remains concerned about the potential costs, particularly to our customers."
SCE said it has already cut emissions to below 1990 levels, in part by helping customers conserve power and by improving power generation methods.
The other major investor-owned California utility, Sempra Energy, said while California is headed in the right direction, federal lawmakers need to get involved.
"Climate change is a global issue and can only be fully addressed by federal legislation. We intend to work with the Congress to help craft comprehensive legislation on this issue," Sempra spokesman Art Larson said.
MANUFACTURING BASE WORRIED
But representatives from other industries said the bill could stall growth in the state.
"We have put the California economy at risk by addressing the risk of global warming," said Jack Stewart, president of the California Manufacturers & Technology Association, which represents about 800 California companies employing roughly half a million workers. "This just moves the problem somewhere else."
In essence, Stewart said, manufacturers who are considering expanding in or moving to California will put their moves on hold for five years, because the final specifics of the regulations are not expected until 2011.
Thomas Duesterberg, president and chief executive officer of the Manufacturers Alliance/MAPI, pointed out that businesses in California already deal with high power prices and electricity supply problems.
"In a globally competitive environment, manufacturers won't be able to sit around and work on marginal costs," Duesterberg said. "They are going to have think seriously about whether or not to stay in California."
But the new initiative will help industrial manufacturers who are shaping new growth plans around clean technologies, said Ron Pernick, co-founder and principal of Clean Edge, a Portland, Oregon-based research and publishing company.
General Electric Co.'s "ecomagination" strategy on renewable energy products and services, DuPont Co.'s move to produce biofuels, and Toyota Motor Corp.'s push into fuel-efficient hybrid vehicles are examples that industrial companies are targeting more "green" business.
California's venture capitalists have also increasingly been betting on green technology.
"The winners in new markets will embrace this inevitable shift to products and services that emit only a portion of greenhouse gas emissions. The economy is shifting," Pernick said.
(Additional reporting by Leonard Anderson in San Francisco and David Bailey in Chicago)
