California Emissions Plan Won't Be Easy or Cheap
Date: 30-Jun-08
Country: US
Author: Nichola Groom
On Thursday, the most populous US state unveiled a plan to reduce greenhouse gas emissions to 1990 levels over the next 12 years with requirements for cleaner cars, more solar and wind energy and stringent caps on big polluting industries.
But the state gave no estimate for the sweeping program's cost except to say that it was expected to contribute about 1 percent of California's economy in 2020.
Many are skeptical of that claim, saying demands for more renewable power and cleaner transportation fuels -- each of which are pricier than traditional fuel sources -- are sure to drive up the state's energy costs.
In addition, sketchy details of the state's plan for a cap-and-trade program have left many with concerns about how the system will be structured. Under cap and trade, polluters must pay for exceeding a set limit on their greenhouse gas emissions.
"You can't just decide that you are going to be a low carbon society without planning that out very carefully," said Cathy Reheis-Boyd, chief operating officer with oil industry trade group the Western States Petroleum Association. "No matter what we do to try to deal with electricity, emissions or transportation fuels, all of those are going to be costly."
Of particular concern to oil companies, Reheis-Boyd said, is whether makers of transportation fuels will have to pay for allowances under the cap-and-trade program in addition to making significant investments in cleaner-burning fuels.
The California Air Resources Board (CARB), which drafted the plan, insists that the plan will not be more expensive.
"I just don't accept the premise that this is going to be more expensive," CARB Chairman Mary Nichols told reporters on Thursday, adding that not only is the price of renewable power dropping, but efficiency measures will slash the state's overall energy consumption.
But many disagree with that optimism, saying the state's utilities are unlikely to be able to meet the plan's requirement that they produce one third of their power from renewable sources by 2020.
California Assemblyman Chuck DeVore, in a letter to Nichols, said he was disappointed that the plan did not advocate for more nuclear plants, which produce cheaper electricity with no harmful emissions.
"I see no other physical way we can meet our ambitious goals," DeVore wrote.
With respect to the cap-and-trade system, California also runs the risk of bumping up against a federal program that many expect will be implemented under the next president.
"What happens when you get federal legislation, probably in a year and a half, to conform all this?" said Peter Fusaro, founder of energy advisory firm Global Change Associates. "The best of all possible worlds would be to use the California plan for a national one ... (but) California doesn't have any coal plants, so there is a disconnect there and that's really where the fight is going to be, in the areas of the country that have coal-burning utilities.
The stakes could not be higher for California, which led the US charge against global warming with a landmark 2006 law aimed at stalling the effects of climate change.
"This is going to be something the world will be watching very closely," California Gov. Arnold Schwarzenegger said at a climate change gathering in Florida on Thursday.
The state's aggressive stance on the issue has sparked widespread optimism among environmentalists and the burgeoning renewable energy industry, but those charged with making dramatic cuts in their emissions said it will be hard work.
The Los Angeles Department of Water & Power, the nation's largest municipal utility, is on track to exceed CARB's 2020 targets, according to Chief Executive David Nahai. But given that renewables make up just 8 percent of the utility's current power production, Nahai said it will be far from easy.
"We all recognize that this is something that we cannot afford to fail at," Nahai sa