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Global Warming Plan Could Be Costly

Businesses can expect to make major changes and consumers may face higher bills, experts say.

September 01, 2006|Marc Lifsher | Times Staff Writer

SACRAMENTO — California's ambitious plan to curb global warming will be costly to businesses and consumers, experts said Thursday, and its effect on the climate could be negligible -- unless other states and nations follow.

Although it is too early to know what will happen over the next two decades, the state's basic industries, including utilities, oil refineries and steel mills, can expect to make major changes in how they do business. And consumers may face higher bills for electricity, gasoline and other goods that use energy.

"My view is that in the end, this is going to be costly, but it's a cost that we have to be willing to pay because the alternative is potentially very bleak," said Severin Borenstein, director of the University of California Energy Institute in Berkeley.

But experts stressed that California could do little if anything to curb climate change on its own because of the global nature of the problem.

"The actual effect on California's climate of reducing the state's carbon dioxide emissions will be negligible. It will only be successful if the rest of the world follows," said Ken Caldeira of the Carnegie Institution's department of global ecology at Stanford University.

Dan Skopec, undersecretary of the California Environmental Protection Agency, said he was optimistic that "once it's proven that California can slow greenhouse gases and grow its economy, other states and other nations will follow."

The bill would require a 25% cut in emissions of greenhouse gases between now and 2020 and is likely to use mandatory emissions caps on power plants, refineries and other heavy industry as well as energy efficiency measures and an emissions trading program.

To reach 1990 levels of greenhouse gases, as the law mandates, experts say California will need to eliminate 174 million metric tons. About one-third would come as a result of an earlier car tailpipe emissions law in California that has been challenged by automakers in court.

Although the economic effects of a mandatory cut in emissions could be sweeping, California has a lot at stake in the battle against global warming, perhaps more than any other state, climate experts say.

Its water supplies, its top industry -- agriculture -- and its most popular recreational activities all depend on a healthy climate, as do forests, deserts, ocean ecosystems and the species that inhabit them.

Amid concern about worldwide climate change, the Assembly on Thursday approved by a 46-31 vote the bill by Speaker Fabian Nunez (D-Los Angeles) and Assemblywoman Fran Pavley (D-Agoura Hills). It passed 23 to 14 in the Senate on Wednesday. The bill now goes to Gov. Arnold Schwarzenegger, who said Wednesday that he would sign it.

California is the world's 12th-largest emitter of greenhouse gases, responsible for 10% of the carbon dioxide produced nationally and 2.5% globally.

Backers hailed passage of the first-of-its-kind action by a state government as a model for the nation and a rebuff to the Bush administration, which supports only voluntary measures to limit carbon dioxide from cars, factories, electric power plants and farms.

On Thursday, the White House issued a muted response from James L. Connaughton, chairman of the Council on Environmental Quality.

"We welcome effective state action to complement over 60 regulatory, incentive and voluntary federal programs working to achieve the president's goal of reducing national greenhouse gas intensity by 18% by 2012," he said.

The new effort is strongly supported by environmentalists, Democrats and Silicon Valley investors. Republican lawmakers and many business organizations oppose it.

National environmental organizations and their new election-year ally, Schwarzenegger, locked arms Wednesday and predicted that the initiative would help protect the planet, provide global leadership and create thousands of high-paying jobs in high-tech industries. They cited a 2005 study by the California Air Resources Board that estimates that the drive to limit greenhouse gas emissions and develop alternative energy sources will produce 83,000 jobs and $4 billion in economic growth.

"It's a fundamental change to the economy," said Menlo Park venture capitalist John Doerr, a partner in Kleiner Perkins Caufield & Byers of Menlo Park. "All of a sudden, innovators, entrepreneurs, well-managed organizations, inventors in Silicon Valley and the CEO of Wal-Mart are motivated by profit to reduce carbon emissions."

But executives in industries that consume large amounts of electricity fear that putting caps on greenhouse gas emissions only in California could drive employers and jobs across state lines. They say the state's electricity prices, already among the highest in the nation, could soar as utilities stop using electricity generated from cheap coal and increase their reliance on costly natural gas.

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