Proposition 23 would suspend implementation of California’s landmark Assembly Bill 32 (AB32): the Global Warming Solutions Act of 2006, which goes into effect January 1, 2012.
Call it the battle of "old vs new," "clean vs dirty," "visionary vs backward thinking," the vote on Proposition 23 in California has turned into a test of whether climate change/clean energy legislation can move forward in the US. California’s AB32 is the only economy-wide greenhouse gas law in the U.S. If it can’t take hold in California, our greenest state, what are the chances of enacting federal legislation?
Polls show that Prop 23 is likely to be voted down, so polluters are funneling millions of dollars into Prop 26, which would eliminate its funding. Read page 2 of this article to learn about Prop 26.
What’s AB32? It requires that California reduce greenhouse gas emissions to 1990 levels by 2020. To do that, AB 32 provides the authority to implement California’s Low Carbon Fuel Standard and Renewable Portfolio Standard, both of which create immediate demand for large-scale, low-carbon transportation fuels and electric power. The bill also authorizes the creation of a cap and trade market for greenhouse gas reduction credits. As part of this program, the California Air Resources Board would develop protocols to certify low-carbon and other pollution-reduction attributes of clean energy technologies.
Prop 23 would put AB32 on hold until California’s unemployment rate falls from the current 12% to 5.5% or less for four consecutive quarters. The state’s unemployment levels have barely touched such low levels since 1976.
You probably know by now that Proposition 23, known as the "Dirty Energy Initiative," is funded by a handful of oil companies and conservative billionaires who want to maintain the status quo.
Valero Energy – the largest oil refiner in the US, and the fourth biggest polluter in California – contributed over $5 million, and oil refiner Tesoro, the eighth biggest polluter, pitched in $2 million. The Koch brothers, who are behind the Tea Party, gave $1 million. Other major contributors include Marathon Oil ($500,000), Occidental Petroleum ($300,000), and the Adam Smith Foundation ($500,000).
Defenders of the status quo insist California can’t afford more environmental regulations when unemployment is so high. They say AB32 will hurt the economy and cut jobs because industries will move to less onerous states.. The fact is, however, that since AB32 passed, California has become the center for cleantech innovation in the US, garnering over $9 billion of private investment capital and employing over 500,000 people.
Luckily, big oil isn’t the only big money in California. The cleantech community has raised $30 million, matching that of the fossil fuel industry.
Leading contributions from the cleantech community include:
- John Doerr, partner of venture capital firm Kleiner Perkins Caufield & Byers ($2 million)
- Vinod Khosla, of venture capital firm Khosla Ventures ($1 million)
- Intel co-founder Gordon Moore ($1 million)
- The Environmental Defense Fund’s political arm (over $1 million)
- League of Conservation Voters ($1.2 million)
George Shultz, Sec’t of State under President Reagan has also been mobilizing against Prop 23, saying the climate law puts all the energy sources, old and new, on a level playing field. 68 of the biggest investment managers in the US – managing $415 billion in assets – have signed on, including Deutsche Bank Climate Change Advisors, the National Venture Capital Association, Domini Social Investments and Pax World Management.
Watch the Ad in favor of Prop 23
Against Prop 23
The investor statement says: "We need certainty about the policies that govern the sectors in which we invest so that we can make strategic, profitable investments over the long term. This policy certainty, however, would be eliminated if Proposition 23 passes. It would cause California to lose billions of dollars of investment and thousands of jobs to competitors like China, Japan, Germany, or other U.S. states that have more stable commitments to clean energy policy."
Kevin Parker, global head of Deutsche Asset Management, says the absence of a federal climate change policy makes it even more critical that states build their own frameworks. If Prop. 23 succeeds it could be a signal to other states and the U.S. government to reverse course on climate change policy.
Some investors are already holding off on making investments because of the uncertainty caused by Prop 23. James Watson, a partner at CMEA Capital, told the Washington Post that his venture capital firm "stopped investing in [California] cleantech eight months ago due to this uncertainty."
Environmentally proactive corporations are also working to defeat Prop 23 through BICEP, Business for Innovative Climate & Energy Policy. Member companies include Levi Strauss & Co., Nike and Starbucks. Bill Gates of Microsoft and Sergey Brin, co-founder of Google have also been active.
And yes, President Obama opposes Prop 23. According to White House spokesman Adam Abrams, Obama calls it "a veiled attempt by corporate polluters to block progress towards a clean energy economy. If passed, the initiative would stifle innovation, investment in R&D and cost jobs for the state of California. And the impacts could affect us all. If successful, corporate special interests will set their sights nationwide."
The Plot Thickens with Prop 26, the "Polluter Protection Act"
Recent polls suggest Prop 23 will be defeated. A Public Policy Institute of California poll finds that 48% of likely voters oppose Proposition 23, compared to 37% that support it. 15% were undecided.
That’s bad news for Big Oil but they’re not giving up. They’re pouring millions of dollars into passing Prop 26, the Polluter Protection Act, which would effectively kill AB32 by de-funding it.
Prop 26 would amend the state constitution to require a two-thirds majority – rather than the current simple majority – to enact any regulatory fees by declaring them "taxes." The fees cover all kinds of businesses including tobacco companies, alcohol retailers and industries required to clean up their toxic waste. Polluters know it’s pretty impossible to get a two-thirds vote. AB32 would be funded by polluter fees – removing them would cripple AB32 and place the burden of cleaning up their mess on taxpayers.
"Prop. 26 would eviscerate the funding of all air- and water-pollution programs, even oil-spill cleanup," says Warner Chabot, Executive Director of the California League of Conservation Voters.
So while everyone’s focused on Prop 23, hardly anyone is talking about Prop 26. Big Oil knows this. Interestingly, the Chamber of Commerce didn’t take a stand on Prop 23 because they don’t want to call attention to the money they’re funneling into passing Prop 26.
If you live in California, remember to VOTE NO on both Prop 23 and Prop 26.
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See Who’s Contributed to Support & Oppose Prop. 23
The California Apollo Program
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