State needs to stay strong on global-warming act
By BUDDY BURKE, President of REP’s California Chapter
written in collaboration with RAY LANE of the venture capital firm Kleiner Perkins Caulfield & Byers
AN HISTORICAL DOCUMENT: published in the Sacramento Bee on May 25, 2008
As gas prices creep across the $4-per-gallon mark, most consumers recognize that an inefficient car is a drag on the family budget.
Multiply those high prices across the state and it’s clear that heavy oil dependence is a drag on the economy. The more we spend on pricey oil, the less money is available for more productive uses, including job-creating investments.
Worse still, burning oil contributes to global warming, a clear risk to California’s economy because of the projected impacts on air quality, public health and mountain snowpack.
Assembly Bill 32, the Global Warming Solutions Act that was adopted in 2006 to cap greenhouse gas emissions statewide, will help all of us use energy more efficiently, cut dependence on costly oil and reduce the risks of climate change. It’s important to keep the state on track toward implementation.
In adopting America’s first cap on global warming pollution, California has taken the lead in addressing the interrelated problems of energy security, environmental quality and economic growth.
In our view as businessmen and Republicans, AB 32 sets our economy on a fast trajectory toward greater prosperity and an improved quality of life for all Californians.
First, energy efficiency makes smart business sense. Over the past 30 years, California’s groundbreaking energy policies have helped to grow one of the largest, most diverse economies in the world while reducing global warming pollution to the lowest per capita level in the country.
Energy efficiency has cut California’s electricity costs dramatically. If California’s annual statewide electricity bill were the same fraction of GDP as Texas’, for example, Californians would be paying almost $25 billion more for electricity each year. Instead, money not spent on wasted electricity is available for investment, generating economic growth and jobs.
The savings generated by efficiency multiply. According to the International Energy Agency, every $1 spent on high-efficiency electrical equipment, appliances and buildings avoids more than $2 in spending on power plants.
Efficiency is the first vital step toward reducing greenhouse gas emissions. Efficiency can deliver more than 50 percent of the total global warming emissions reductions needed worldwide to keep the climate stable, according to a recent analysis published by the McKinsey Global Institute.
The next vital step is to create market certainty in order to encourage greater investment in cleaner energy technologies. By adopting emissions caps in AB 32, California established certainty in a political environment where uncertainty over inevitable global warming reductions made long-term investment decisions difficult.
Before AB 32’s adoption, investment in clean technology – now the third-largest and fastest-growing category of venture capital investment – was going overseas where policies are known and rules are predictable.
After Gov. Arnold Schwarzenegger signed AB 32 into law, venture capital investments in cleaner energy technologies skyrocketed in California. In the first half of 2007, the state attracted 49 percent of all clean tech venture capital in the United States.
Our state also leads the United States in clean tech patent registration – a harbinger of innovation. This is critically important. When California innovates – witness computers and biotechnology – it changes the world and captures a significant share of markets in emerging industries.
Worldwide, revenues from clean energy technology – wind, solar, fuel cells and biofuels – totaled $77 billion in 2007. By 2017, total revenue is projected to grow to $254 billion. Thanks to AB 32, California is well positioned to be a major player in the fast growing clean energy industry.
Grabbing a large share of clean energy’s projected growth will keep money and jobs in California. Every year, California exports $30 billion – $2,500 from every California household – to buy fossil fuels. Thanks to AB 32, more of that money will stay home and create jobs here.
Importantly, the benefits will not be limited to a few urban clusters. Because clean energy production is distributed broadly, every part of the state will share in the wealth that it creates. Today, clean energy businesses are popping up in all 58 of California’s counties.
Delaying implementation of AB 32 would put that growth potential at risk. If California dawdles, the investments will go elsewhere. Texas will gladly take the wind dollars, Germany the solar and the Midwest will capture the biofuel investments.
In a global market with hungry competitors, the punishment for hesitation is swift and sure.
California cannot afford delay.
California needs to stay on track with AB 32 for the health of our economy and for the future generations that depend on our decisions.