California adopts tough plan

2008-12-12 19:11

Sacramento - California has adopted the most sweeping plan in the US to cut greenhouse gas emissions, issuing rules that could transform everything from the way factories operate to the appliances people buy and the fuel they put in their cars.

The Air Resources Board unanimously approved the plan on Thursday despite warnings it will put costly new burdens on businesses at a time when the economy is in extreme crisis, with California forecasting a staggering budget gap of $41.8bn through mid-2010.

Republican Governor Arnold Schwarzenegger said he believes the regulations will spur the state's economy and serve as a model for the rest of the country.

"When you look at today's depressed economy, green tech is one of the few bright spots out there, which is yet another reason we should move forward on our environmental goals," Schwarzenegger said in a statement.

The strategy relies on 31 new rules affecting all facets of life, including where people may build their homes and what materials they use to do it.

Cap-and-trade programme

One central piece is a cap-and-trade programme, set to begin in 2012, under which power plants, refineries and big factories will be able to buy and sell the right to emit heat-trapping gases.

The programme could give plant operators a financial incentive to reduce their carbon emissions.

Air regulators said the average Californian could see more fuel-efficient cars and plug-in hybrids on showroom floors; better public transportation; housing nearer to schools and businesses; and utility rebates to make their homes more energy-efficient.

But there will also be costs: Cars could become more expensive, and Californians can expect higher electric rates as utilities increase their use of renewable energy.

Homes built with energy-efficient materials could also prove more costly, as could gasoline reformulated to release less carbon dioxide.

Leader confronting climate change

The rules spell out in broad terms how the state intends to carry out a landmark 2006 California law that made the state a leader in confronting climate change.

The law - conceived when the economy was in better shape - requires the state to cut greenhouse emissions to 1990 levels by 2020. More detailed rules will be issued over the next few years.

California, the most populous US state, has long been in the vanguard of the environmental movement, adopting the nation's toughest restrictions on auto pollution decades ago.

Because of its size and market clout, its decisions can have effects far beyond the state, with manufacturers around the country often adapting their products to meet California's stricter standards.

John Kabateck, executive director of the California branch of the National Federation of Independent Business, argued against the new rules, warning: "Now is not the time to make it even harder to do business in California."

Save money in the long run

But Air Resource Board chair Mary Nichols said California's plan would save its residents and businesses money in the long run.

"We believe that California, again and again, has pushed for higher levels of efficiency in our electric sector, our buildings and appliances, and time after time it turns out efficiency measures have not only saved us money, but leaped our economy ahead," Nichols said after the vote.

A board report found that the average household would save $400 a year by driving more fuel-efficient vehicles and living in more energy-efficient homes.

And already, private investors have given more than $2.5bn this year to new companies that have sprung up in California, in part to respond to the state's environmental goals, said Bob Epstein, co-founder of Environmental Entrepreneurs.

"Our president-elect has called for stimulating our economy," said Bill Mcgavern, director of California's Sierra Club. "I think he and the Congress will be looking to the state of California, and these measures can serve as a model for the rest of the country."

Cleaner cars

One major piece of the plan is contingent on the federal government giving California the go-ahead to force automakers to build cleaner cars and trucks.

The Bush administration has blocked that law from taking effect, but California officials hope the Obama administration will reverse course.

The plan will also require utilities to generate one-third of their electricity from renewable sources such as wind, solar and geothermal by 2020.

And energy-efficiency standards for buildings and for air conditioners and other appliances will be strengthened.

Also, fuel providers will have to reformulate transportation fuels so they are a combined 10% less carbon-intensive by 2020.

Local governments will get incentives to curb urban sprawl and reduce how far people drive to work or school.

The cap-and-trade plan that will allow businesses to buy their way out of the problem is a particularly contentious part of the plan.

California's poor communities say polluters in their neighbourhoods may just write a cheque rather than clean up their act.

- AP