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 Sacramento Watch?

Schwarzenegger Gives Environmentalists a Victory

California Governor Agrees to Nation's Most Sweeping Greenhouse Gas Regulations

Do We Need to Call This "Sacramento Watch"?

Based on Reports from Forbes.com and The Los Angeles Times

Last month, Caifornia Governor Arnold Schwarzenegger broke with the Bush administration by signing a greenhouse gas accord with Britain's Tony Blair. "California will not wait for our federal government to take strong action on global warming," the governor said.

He was right.

California would become the first state to impose a limit on all greenhouse gas emissions, including those from industrial plants, under a landmark deal reached Wednesday by Schwarzenegger and legislative Democrats. The legislative agreement puts California on a path to reducing its emissions of carbon dioxide and other greenhouse gases by an estimated 25 percent by 2020.

The bill still needs lawmakers' approval, but that appears likely, given that Democrats control the Legislature.

The bill would require the state's major industries - such as utility plants, oil and gas refineries, and cement kilns - to reduce their emissions of the pollutants widely believed to contribute to global warming.

A key mechanism driving the reductions would be a market program allowing businesses to buy, sell and trade emission credits with other companies.

The bill was praised by environmentalists as a step toward fighting global climate change but criticized by some business leaders, who say it would increase their costs and force them to scale back their California operations.

Republicans in the Legislature say climate change should be addressed--or not addressed--at the national level, not on a state-by-state basis.

"Adopting costly and unattainable regulations will drive businesses and jobs out of California into other states and even into other countries with no commitment to improve air quality," said Assembly Republican leader George Plescia, a LaJolla Republican.

Schwarzenegger and the Legislature's Democratic leadership have embraced a cap on vehicle and industry emissions as a way to make California a trendsetter in fighting global warming.

The nation's most populous state is the world's 12th-largest emitter of greenhouse gases and could suffer dire consequences if global temperatures increase only a few degrees. Reports by state agencies indicate that a 2- to 3-degree rise in temperature could melt the Sierra Nevada snowpack earlier each year, leading to flooding in the Central Valley and threatening the state's long-term water supply for cities and farms.

Schwarzenegger had insisted that the California Air Resources Board, which will oversee the program, be required to implement the market-based strategy. The agreement does not make the system mandatory, as the governor wanted, but it does strengthen the Democrats' original language to make it easier for the air board to implement such a system.

Schwarzenegger has tried to position himself as a leader in the fight against global warming. Last year, he issued an executive order calling for the state to reduce its greenhouse gas emissions to 2000 levels by 2010, 1990 levels by 2020 and to 80 percent below 1990 levels by 2050.

During the negotiations over the California cap, Schwarzenegger sought to appease his supporters in the business community by arguing for safeguards for the industries that would be most affected. "We can't really tolerate anything that raises energy costs," said Dorothy Rothrock, vice president of the California Manufacturers & Technology Assn.

Even a normally staunch Schwarzenegger ally, the California Chamber of Commerce, denounces the governor's global warming legislation as "a job killer," an epithet the group usually pins on bills carried by liberal Democratic lawmakers.

Administration officials have spent weeks seeking assurances that any legislation would require a market program similar to those in the European Union. The idea would allow businesses to buy, sell or trade emission credits with other companies instead of making their own reductions if those cuts were considered too costly or technology difficult.

Such a program could help industries that may not be able to meet their targets through energy efficiency practices or the use of alternative fuels.

The negotiated bill included a provision allowing the governor to push the cap deadline back by one year "in the event of extraordinary circumstances, catastrophic events or threat of significant economic harm."

Assembly Speaker Fabian Nunez said he hoped industry representatives would be "much more comfortable" with the bill once they had a chance to read it.

80% of California residents say they're worried about global warming, according to a July poll by the Public Policy Institute of California.

Schwarzenegger compares global warming doubters to people who once believed the world was flat. He calls business critics doomsayers. "You can build a great economy and you can take care of the environment at the same time," he insists.

Stark disagreements, however, arise over what Californians specifically can do to attack a problem that doesn't confine itself to state or national boundaries. Environmentalists contend that at minimum California should become a model for other states and countries by taking strong measures to deal with global warming. Symbolic acts are fine, counters business, but not if it means chasing jobs to neighboring states that don't limit greenhouse gas emissions.

Until now, business says it opposes any government limits on greenhouse gas emissions, even if the caps are tied to a market-based system that allows industries to buy and sell permits that would allow them to release carbon dioxide and other greenhouse gases. With that in mind, Nuñez said he was talking to two electric utilities, at least one oil company and the cement industry to convince them they could live with the emissions caps.

The governor is sympathetic to business concerns. His version of AB 32 contains a so-called safety valve that would allow deadlines for capping greenhouse gas emissions to be extended if an administration-dominated Climate Action Board decided that limits would harm the economy. The governor's proposal also would create a new bureaucracy, consisting of the heads of a number of state agencies, to oversee the process for mandatory reporting and capping of greenhouse gas emissions.

"We have no intention to put people out of business or do economic harm," Cal-EPA's Adams said.

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