Dealing with climate change won’t be easy

Nearly a decade ago, California policymakers, facing a frightening future of shriveling snow packs and rising seas, created the nation’s most aggressive program to combat global warming.

The 2006 law mandated broad reductions of greenhouse gas emissions by 2020. Now, as the deadline approaches, Gov. Jerry Brown and Democratic lawmakers are intensifying their efforts. They are crafting emissions-reduction targets for 2030 and 2050 that will be far more difficult to meet. One bill seeks to slash petroleum use in vehicles to levels not seen since Lyndon Johnson’s presidency.

As the debate continues, a number of questions remain. Will other states or nations follow California in pursuing deep emissions cuts? Will California be able to meet the new targets, and if so, how? What are the total costs and benefits of the programs? How much will the price of gasoline and electricity increase?

Here’s some of what we know:

▪ The state has emerged as a global leader in fighting climate change, despite producing only about 1 percent of the world’s greenhouse gases. It has created a dizzying array of programs to cut pollution, from reducing the carbon content of fuels to capping emissions at large factories.

▪ The 2006 law, Assembly Bill 32, established a goal of cutting the state’s greenhouse gas emission to 1990 levels by 2020. To meet that goal, emissions need to fall by six percent between 2013 (the latest year for which figures are available) and 2020. Brown and other leaders expect that to happen. However, emissions have fallen only slightly since the recession ended in 2009.

▪ An executive order issued by Brown this spring would reduce greenhouse gas emissions to 40 percent below 1990 levels by 2030. That will be much harder to achieve. Over the 10 years leading up to Brown’s deadline, emissions must fall up to seven times as fast as during the preceding decade. And emissions would have to fall another 40 percentage points by 2050 if a bill currently before the Assembly passes.

▪ Cutting emissions is costly. Californians have seen an estimated 3 to 5 percent rise in electricity rates, and are paying about an extra dime per gallon of gas due to climate-related programs. A study by a San Francisco consulting group found that deep emissions cuts by 2030 could carry costs of up to $23 billion a year. That could go higher by 2050, said the group, which did not tally the health benefits of cleaner air or the climate benefits of lower emissions.

▪ Despite pioneering policies, emissions have fallen more slowly in the state than in the rest of the nation. Greenhouse gas emissions in California dropped by 7 percent from their peak in 2004 to 2013, compared to 9 percent nationwide over the same period. Reducing emissions is harder here because the state’s economy is already relatively energy-frugal.

When AB 32 passed, establishing the nation’s first broad plan for cutting greenhouse gas emissions, environmentalists hoped the action would touch off a revolution. The target established by the law was ambitious, especially considering continuing population and economic growth. It built on an earlier bill to reduce greenhouse gases in car exhaust.

“We realized under AB 32 and the car bill, we’re not just talking about polar bears and arctic ice caps but this was real impacts to California,” said Sen. Fran Pavley, D-Agoura Hills, an author of both bills. Melting mountain snows, rising seas and poor health resulting from warmer temperatures – all resonated with Californians, she said.

At a signing ceremony for AB 32 on San Francisco’s Treasure Island, then-Gov. Arnold Schwarzenegger predicted major nations like Mexico, Brazil, China and India would join the fight against climate change. So would the federal government.

“Trust me,” Schwarzenegger said to applause, “I am convinced of that, that this will happen, because nothing is more important than protecting our planet.”

Pavley and Schwarzenegger would be disappointed. Democrats and a few Republicans in Congress tried to pass a bill to cap greenhouse gas emissions nationally, but it failed. Pavley’s effort to clean up cars’ tailpipes did eventually become the basis of a national policy. But federal rules on climate change still lack the breadth of California’s. Nations like China and Brazil have also moved slowly.

But the state has forged ahead, still hoping to inspire beyond its borders. To stop climate change, the whole world – not just California – must participate. As Brown travels to the Vatican this week and to a United Nations climate change summit in Paris in December, he surely will argue that if one of the world’s largest economies can slash emissions, so can others.

A kaleidoscope of programs has accelerated California’s shift to a clean economy. The broadest and perhaps most controversial is the cap-and-trade policy, which subjects the state’s most-polluting companies to a cap on greenhouse gas emissions and allows them to trade credits to pollute. The California Chamber of Commerce has challenged the legality of the program. The state has prevailed so far, but the verdict has been appealed.

Other policies for cutting greenhouse gas emissions include a requirement for most electricity providers to get 33 percent of their energy from renewable source, such as wind farms and solar arrays by 2020, though it does not include the lowest-emissions source of all – falling water. Also, low-carbon fuel standards require gasoline and diesel producers to make their products 10 percent less carbon-intensive by 2020.

Other programs have goals for making buildings more energy efficient, increasing the number of electric vehicles and maximizing use of public transportation.

These rules, arcane and complex, remain largely invisible to most Californians. But they result in slightly increased prices, notably at the gas pump, where economists say cap-and-trade has added a dime a gallon in seven months. Electric bills are also rising. The Public Utilities Commission estimates electric power rates have increased 3 to 5 percent due to renewable energy requirements.

“I wish we could mark on a nice spreadsheet the incremental cost for every regulation,” said Tupper Hull, vice-president of the Western States Petroleum Association.

It is difficult to find companies that have left the state due exclusively to climate policies, as opposed to California’s broad basket of regulations. But industry groups predict this will happen as policies grow stricter.

“Energy cost in the state will necessarily rise, and that will create challenges for retaining employment,” said Robert Wyman, Jr., a Los Angeles partner at Latham & Watkins, which represents business clients. He argues California’s system of interlocking policies has made compliance more expensive than it would be under a single, market-oriented system, such as cap-and-trade.

California officials do not know how much their climate rules have cost or saved. The Air Resources Board, which oversees greenhouse gas reductions, said in a key document that the law’s impact on economic growth remains unknown. Some years earlier, a knot of studies estimated California’s gross state product could see from a 1 percent gain to a 2.2 percent decline due to AB 32. The models differed in assumptions, such as forecasting the pace of change.

AB 32’s defenders say in addition to cleaning the air, the law has contributed to a vibrant clean-energy industry that is innovating with startling speed. A survey in December from the Advanced Energy Economy Institute, an organization co-founded by billionaire clean-energy activist Tom Steyer, found that employment in the state’s clean-energy sectors like solar and wind, along with nuclear and natural gas electricity generation, rose 5 percent over the prior year. Another study, funded by the environmental nonprofit Next 10, argues that using less gasoline (in electric and hybrid cars) should free up spending and create jobs.

.

The long-term future of California’s greenhouse gas programs lies in two bills that have passed the state Senate and are being evaluated this summer by the Assembly.

Senate Bill 350 aims at three pieces of the energy puzzle – petroleum, electricity and buildings. It seeks to cut petroleum use in motor vehicles by 50 percent (a difficult target, analysts agree), boost electric utilities’ reliance on renewable energy to 50 percent, and double the energy efficiency in buildings – all by 2030.

Senate Bill 32 would require reductions in greenhouse gas emissions to 80 percent below 1990 levels by 2050. The long-term targets are drawn from international climate science: If large nations cut emissions that sharply, scientists believe it can limit the world’s warming.

How California will meet these tougher targets remains uncertain, though political leaders insist they will bring more green jobs to the state and reduce unhealthy pollution.

“Unless we do something, our economy will be severely damaged,” said state Senate leader Kevin de Leon, D-Los Angeles, who co-authored SB 350. “The public health of our children will be severely impaired.”

A study by Energy and Environmental Economics (E3), a San Francisco-based consulting group hired by the state, said a cut of 33 percent by 2030 could cost about $50 per Californian per year.

To meet those future goals, the model used technologies only marginally in use now, such as renewable diesel, according to Amber Mahone, E3’s director of climate policy analysis. It also assumed new or expanded regulations would be needed. For example, the analysis factored in more capture of the methane from manure at California’s dairy farms, a sector that, for now, largely falls outside mandatory regulations.

The impact of reaching the tougher targets of slashing greenhouse gas emissions to 80 percent below 1990 levels, said E3, could range from a savings of $15 billion to costs of almost $100 billion yearly, under a scenario in which emissions fall at a steady rate. The range reflects the projection’s uncertainty.

On the human level, modeling by Bloomberg New Energy Finance found the cap-and-trade program could raise gasoline prices by 22 cents a gallon by 2025, though there is an outside chance prices could go 50 cents higher, according to Colleen Regan, an analyst. However, Californians should need less gas as cars become more fuel-efficient or electric.

Many of these numbers are hazy predictions. What is clear is that meeting long-term targets will be difficult and costly.

Not only must the emissions reductions come faster in the future, but the reductions could be harder. California has not been able to bring down its greenhouse gas emissions as quickly as the nation in recent years. The data hint at difficulties ahead. Gasoline sales are ticking up. Emissions have been largely flat since falling steeply in 2008-09 as the recession hit.

“On greenhouse gas emissions, California has always been an A student,” said Ashley Lawson, a senior carbon analyst at Thomson Reuters. “So to perform any better, you have to work really, really hard to go from an A to an A-plus.” The rest of the country, which is replacing coal-fired power plants with less-polluting natural gas plants, “was able to go from a C to a B, with almost no effort at all,” she said.

Critics such as the Chamber of Commerce say the drastic emissions measures could harm the economy and kill jobs. Supporters counter that such sky-is-falling projections in the past have not come to pass, and that innovation is accelerating.

When Schwarzenegger signed AB 32, above the howls of industry groups, electric cars had barely begun to hit the roads, and a rooftop’s worth of solar panels cost more than a year at a private college. Prices have fallen since, and California is getting cleaner.

The question for the future is whether it can get clean enough.

This story was originally published August 2, 2015 at 9:21 AM with the headline "Dealing with climate change won’t be easy."