Oil-Backed Prop. 23 Could Suspend CA Emissions Reductions, Hurt Green Startups

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Come November, California voters could have a major impact on the state’s environment. The ballot will include Proposition 23, a measure that would suspend the Global Warming Solutions Act that passed in 2006 (otherwise known as Assembly Bill 32), which called for reductions in greenhouse gas emissions to 1990 levels (about 25 percent) by 2020.

The election results will not only influence California’s atmosphere, but also the many cleantech companies working on emissions monitoring, reporting and reduction.

The Golden State has been extremely progressive when it comes to the environment. It has set aggressive targets for emissions reductions, established ambitious quotas for renewable energy generation, and required major automakers to produce zero-emissions vehicles or — if they can’t — acquire the requisite credits to make up for tailpipe pollution. Considering these strides, it’s surprising that early polls show fairly even public division on the issue.

Proponents of the proposition say that a focus on slashing emissions will hurt California’s economy — and particularly its unemployment rate — during an already dismal period for the state, which has been rife with budgeting issues for years. The prop would suspend efforts to curtail emissions until unemployment falls below 5.5 percent for four consecutive quarters. Right now, that figure stands at 12 percent.

Early political indicators suggest that California will move to the right this November, with Republican challengers Meg Whitman (for governor) and Carly Fiorina (for U.S. Senate) — who have generally weak environmental agendas — gaining traction. The poor economy is clearly a factor. While tough emission cuts could eventually boost employment in the state by fostering renewable energy projects, voters are more panicked about immediate job loss and cost hikes.

Proposition 23 is also being helped along by generous backers, namely massive Texan oil interests Valero Energy and Tesoro. Both companies have deep pockets, and, especially in the wake of the BP oil spill, high stakes riding on the suspension of incendiary emissions regulations. In the past, California has been a trendsetter in environmental policy, with other states closely following its lead. If AB 32 survives, oil companies are bound to see similar measures adopted elsewhere, cutting deeper into their market share.

In the last week, Prop. 23 has become a major point of contention among the candidates in the running. While Whitman hasn’t come out in full support of the measure, she has recommended sitting on the issue for a year to see where unemployment is at that time. Her Democratic opponent, Jerry Brown, on the other hand, has embraced AB 32 fully, and is rallying his supporters in its defense.

While the campaigns for and against Prop. 23 will no doubt pique the interest of environmentalists and oil and gas interests, many young companies have their eyes fixed on the outcome too. Venture-backed startups like Hara, Enxsuite (formerly Carbonetworks) and Enviance, which all monitor and help reduce clients’ carbon footprints, have been betting on stringent emissions reductions on both state and national levels. And now that the national climate bill — which could have set up a carbon cap-and-trade system in the U.S. — is all but dead in the Senate, state-by-state laws are more important than ever.

Even less relevant companies like large-scale solar developers — think SunPower, First Solar and BrightSource Energy — all stand to benefit from steep emissions cuts that would limit dependence on fossil fuel sources of energy. General Electric, First Wind, and other wind farm developers would also get a boost, one that could allow them to eventually hire thousands of new workers. That said, many of these companies aren’t as concerned with the Prop. 23 vote, arguing that state mandates for 33 percent of energy to come from renewables by 2020 will continue to help their green operations grow.

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