Don’t panic

Proposition 23 is billed as a titanic battle between Big Oil and big green, slugging it out over California’s budding attempts to fight climate change.

It’s certainly going to be an expensive ballot fight, with out-of-state oil companies and other business interests funneling more than $3 million into the campaign to suspend Assembly Bill 32, California’s ambitious climate-change law. Environmental groups have put in $2 million of their money to save the law, also known as the California Global Warming Solutions Act.

But even if Prop. 23 passes in November, most of California’s rules and regulations on greenhouse gases would remain on the books. Instead of saving the economy from overzealous environmental regulation, the measure is more likely to spawn lawsuits and confusion—and send a message to clean-tech investors that California can’t make up its mind.

According to Deloitte Consulting, $2 out of every $3 invested in clean energy were spent here in California in the last year. Prop. 23 would likely kill much of that investment, said V. John White, an environmental consultant and backer of A.B. 32.

“The problem is that this is going to be a monkey wrench right at the time when we’re trying to launch this new economy,” he said.

In some ways, A.B. 32 may become a victim of its own hype. Democratic leaders and Gov. Arnold Schwarzenegger certainly enjoyed a national spotlight when A.B. 32 became law in 2006. But to its critics, A.B. 32 represented the many-headed monster of government regulation. “They are going to regulate every part of your life,” said Assemblyman Dan Logue, one of the authors of Prop. 23.

The California Air Resources Board is certainly looking for ways to reduce greenhouse-gas pollution in every sector of the economy. But as laws go, A.B. 32 is actually pretty sparse.

Mostly, it set a goal of reducing greenhouse-gas emissions to 1990 levels by the year 2020, and then provides a framework for lots of other laws and regulations, most of which became law completely independent of A.B. 32.

In order to meet the goals of A.B. 32, the state will have to cut about 175 million metric tons of climate-change gases—primarily carbon dioxide, but also heavier, more potent pollutants, like methane and hydrofluorocarbons.

Implementation of A.B. 32 will involve dozens of programs, but just a handful will do the heavy lifting.

The most controversial is a proposed “cap and trade” scheme, which would cap emissions from the state’s biggest polluters, like electricity power plants and oil refineries.

The state’s climate-change strategy also includes California’s clean-car rules, called the “Pavley regs,” and California’s low-carbon-fuel standard, requiring cleaner auto fuels to be sold in the state.

The two other major programs include California’s renewable electricity standards, requiring electric utilities to boost their green power supply, and a suite of energy-efficiency programs being promoted and administered by the California Public Utilities Commission.

Prop. 23 would suspend one, or maybe two, of those big programs.

Any cap-and-trade plan would certainly be suspended if Prop. 23 becomes law. In fact, there’s a good chance cap-and-trade would get suspended even if Prop. 23 doesn’t pass; it’s that politically controversial and confusing to voters.

But most of other the big programs that achieve the emissions reductions contemplated under A.B. 32 could remain intact.

For example, California’s clean-car rules, requiring automakers to reduce carbon-dioxide emissions from new cars and trucks by 30 percent by before 2016, actually predate A.B. 32. And the Pavley regs have since been adopted by the U.S. Environmental Protection Agency as the national standard.

Likewise, the state’s renewable portfolio standard, requiring 20 percent renewable power by 2010, would certainly survive because it was enacted by earlier legislation. That’s little consolation, since none of the states big private electricity providers will meet the goal this year. But more aggressive renewable targets would also probably be exempt from Prop. 23.

“If it doesn’t say ‘A.B. 32,’ there’s probably a strong argument that they could still do it,” said Prop. 23 spokeswoman Anita Mangels.

By that logic, a new law sponsored by state Senator Joe Simitian, which would boost the renewable portfolio standard to 33 percent by 2020, should also be unaffected by Prop. 23.

The state Air Resources Board includes about 70 different programs in its greenhouse-gas-reduction toolbox. White said the initiative is so broadly written that it’s hard to tell what regulations and programs would remain, which would be nixed and which would wind up in the courts. “The way it’s written, it can cause a lot of mischief,” he said. “We’d probably be able to muddle through. It’s the uncertainty and the litigation that worries me.”

Backers of the initiative agree that much of Prop. 23’s impact will be sorted out in the courts. Logue said even he isn’t sure which pieces would be scrapped by the new law and which would be left unscathed.

“It’s a good question,” said Logue. “I think there’s going to be a lot of legislation that’s going to be tested in the courts.”

One might wonder, then, how Prop. 23’s backers hope to save the economy from environmental regulation if they’re not even sure what the measure would do.

“A.B. 32 does have some severely detrimental programs, like cap-and-trade and like the low-carbon-fuel standard,” replied Mangels.

But it’s arguable that whether the low-carbon-fuel standard is really wholly a creature of A.B. 32, since the governor issued a very similar executive order in 2007. It’s also true that the low-carbon rules might not survive a lawsuit, currently underway, by trucking companies and oil refiners.

White says that program in particular explains the existence of Prop. 23.

In the spring of this year, Logue’s ballot measure appeared to be floundering and lacked the money needed to go forward. But a cash infusion from some Texas oil companies funded the signature-gathering campaign needed to get it on the ballot.

“Somebody at the highest levels of Valero and Tesoro decided to take this right-wing, crackpot, tea-party idea and make it something real,” said White.