When it comes to climate change the world looks to California, and with that visibility comes billions of dollars in public and private investment. Goals like the Low Carbon Fuels Standard, and the Renewable Portfolio Targets have created a market environment ripe for increased investment in clean tech and renewable energy development.
Arguably these policies and the efficacy of funding mechanisms like cap and trade are enabled by the larger umbrella policy AB 32. This landmark 2006 legislation established an emission reduction goal for California to achieve 1990 emissions levels by 2020. This summer, when SB 32 entered the State Assembly to extend the targets of the policy through 2030, quick passage was expected. However, in large part due to oil lobbies and trade organizations such as WSPA, what was once seen as a sure bet has quickly become a contentious policy struggle.
Big Oil has employed several tactics designed to slow California’s climate leadership. British nonprofit Influence Map estimated to spend $114 million annually on climate issues. The American Lung Association reports that the oil lobby spent nearly $28 million in California’s 2015-16 legislative session, averaging over $50,000 per day since January 1, 2015. With that much spending power, their coalition is astonishingly effective at running a multi-front campaign that employs every trick in the book to stall California’s environmental economic engine and leadership.
Big Oil has set their sights on cutting the financial legs out from beneath California’s Cap and Trade Program – using legal teams and pending lawsuits to create market instability. One lawsuit claims that cap and trade is actually a “tax” placed upon California’s businesses and as such requires a 2/3rd majority vote in the Legislature to be enacted – something cap and trade did not receive when AB 32 was enacted by a simple majority in the Legislature in 2006.
While a ruling on the lawsuit is still pending, special interests may be less concerned with the outcome than with the impact the lawsuit has had on emission permit sales. The last auction only sold 11% of the total available credits, a market outcome reminiscent of the April 2006 collapse of the European Union Emission Trading Scheme, in which the price of carbon fell by 55% in a single day due to the release of a third party analysis.
It’s a nuanced argument that posits that political signals will have economic outcomes in communities living near the poverty line. It’s also an argument that begins to break down when the financial allocation data from California’s Cap and Trade fund is carefully mapped, something I have done as part of my work with Environmental Entrepreneurs (E2). I helped analyze California’s Cap and Trade Fund allocation and designed 80 fact sheets, one for each Assembly district in California, showing the positive economic, environmental, and social impact of climate investment across the state.
What I discovered is that money from the cap and trade program is flowing into programs that ultimately save California’s money. These programs provide Californians with access to clean vehicles, housing near transit corridors, as well as free solar installations and energy efficiency retrofits.
A report available on E2’s website calls attention to the 500,000 jobs currently in California’s advanced energy economy and shows that climate policies have injected about $48 Billion into the state economy. As Alex Jackson of the NRDC recently posted “no amount of money can alter the facts: since AB 32 went into force, emissions and energy consumption are down, while the economy, population, and employment are up—and none of the oil industry’s doomsday prophecies came to pass.”
SB 32 is also different from AB 32 as it has given a fairly large concession to oil interests and does not give any direct authority to cap and trade. All the new bill does is further strengthen the state’s reduction targets post-2020. It does leave questions about how programs like cap and trade will be administered and how its funds will be allocated in the future unanswered. But for business leaders watching the political games unfold in Sacramento, passing SB 32 will go a long way in creating the market security needed to attract the investors needed to fund capital intensive projects like large-scale wind and solar farms.
Having seen the numbers, and met the people at the forefront of growing California’s clean economy, it’s clear to me that California’s climate leadership is clearly growing the state’s economy. This isn’t the time to stop.