California's Climate Change Legislation Serves as Example for Nation and the World

What have been the governor's priorities and challenges regarding climate change? How did the administration and legislature break down the problems and draft the state's landmark legislation?

The first thing, of course, is to understand where the emissions are coming from. When I arrived as secretary of CalEPA in 2003, before setting targets, we tried to understand our inventory of emissions, the forecast of what would happen if we continued to emit-which was business as usual-and then to score what kind of reductions would we get from existing measures like energy efficiency measures or the clean car law. That tells you what is left.

About 40 percent of the emissions come from mobile sources-cars and trucks. We already have AB 1493, the Pavley Law or the California Clean Car Law, as it's called, in place to reduce greenhouse gas emissions from all cars by 2014. That will take quite some time to get into the fleet, because we are talking about new cars being sold by 2014; then it takes another 15 years or so to get those fully into the marketplace and replace the existing fleet.

So it is quite a bit of time before you get the reductions from those kind of policies, which is what spurred our thinking about things like the low-carbon fuel standard, which will try to reduce the emissions from all of the fuels we are burning with today's fleet. Then there are other measures to get more energy efficiency and reduction of vehicle miles from that sector.

The other 60 percent is coming from the electricity-generating sector and other industrial categories, including things like refineries. There is obviously a long history of regulating those smoke-stack industries and a pretty good inventory of what is coming out of the smoke stacks. So, there it is a little easier to get quicker results, especially with market-based and flexible solutions, like a cap and trading system, which is what we are dealing with now. And then, of course, conserving energy will produce an immediate response. Obviously, every unit of energy-whether it is natural gas in a power plant or gasoline in a car-that you don't combust is greenhouse gas that you don't create. There are things like changing to compact fluorescent light bulbs or alternative energy vehicles. That gets you greenhouse gas reductions, literally, overnight.

In the absence of strong federal policy on climate change, the states have become the laboratories for investment and civic entrepreneurial activity. What is the promise of state experimentation? What kind of platform is that, given that the environment doesn't know political boundaries?

It is better to do things like car regulations at the federal level, because, obviously, cars, trucks, planes, and trains go from one jurisdiction to another. So it would be helpful if the federal government would adopt California's Clean Car Rule, for example, to cover all vehicles. Or if the federal government would increase the corporate average fuel economy (CAFE) standards.

But the other 60 percent of greenhouse gas emissions involves power generation, other industrial emitters, or landfills, which are stationary. Each state or region, I think, knows best what kind of emissions it has and what kind of measures are appropriate to get the environmental benefits while also being mindful of economic impacts.

So, for example, in one state there might be an industry about which you might say, "Hey, it's very healthy. It's very profitable. We can afford to ask them to cap and reduce their emissions much more quickly." But there might be another industry that is marginal and needs a little more help, like some tax breaks, in order to do the same thing. We might need to phase in the regulation a little more slowly in that case.

It is important that states be given a lot of latitude. The federal Clean Air Act and Clean Water Act standards are set by the feds and then punted back to the states, saying, "It is up to you to come up with an implementation at the state level for how you are going to do it, allowing a lot of flexibility for state and regional behavior." I think there is plenty of evidence that that is the best way to go about these things.

Some have described you as the best advocate for what California has done in terms of green policy. What have you been doing since you left the Schwarzenegger administration?

I guess you could call me the Johnny Appleseed of climate, which is not just to say that California has the perfect model-there are a lot of other good models in other jurisdictions. I go to other states, talk with governors, and share stories to try to get them the technical help that they might need for identifying where their greenhouse gas emissions are coming from and doing a stakeholder process to come up with a broadly supported climate plan similar to California's. And then lining them up as we've done recently by creating the five-state Western Regions Greenhouse Gas Initiative to allow trading among those states. Ultimately, we hope to include British Columbia and other Canadian provinces.

I was recently in Australia, and there is a lot of interest by Australian states to join that system as well. Sometimes it is a matter of going out on behalf of Governor Schwarzenegger. Other times it hinges on representing the success stories of other state or regions and helping other state or provincial level governments achieve the same kind of things that California has although not always following the California model.

In March, CBS News did a series on American green entrepreneurs in Europe and how the financial markets and government regulations there are far ahead of the United States, and even California, in encouraging the diffusion of green technology. Was that report accurate, and what lessons did it have for California and other states?

I didn't see that report, but I would disagree that California is behind the curve. The average American consumes about 12,000 kilowatt-hours of electricity per year. Californians consume less than 7,000 kilowatt-hours per person per year. That didn't happen by accident. We synthesized all kinds of energy efficiency technologies and innovations in green technology.

In the United States we are the leader in things like solar, with things like the governor's solar roof plan, and with hydrogen, with the hydrogen highway. It's a good race to be part of. We all want to become the greenest and the most energy efficient place on the planet. California is not lagging behind in this race, though some other states in the United States are. Ultimately, we are trying to create a tide that lifts all boats.

As we talked about earlier-we are learning from the European model, whether it is on carbon trading or incentives for green technology. Similarly, I think there is a great deal that they can learn from us.

In an interview in verdexchange, Robyn Beavers of Google talks about their solar project, which will generate 30 percent of the energy for their entire campus. She described having to navigate through local regulations to accomplish even that. How can the public sector encourage that type of entrepreneurial investment in green technology?

Sometimes we can put good policies, incentives, and money in place, but then there are still barriers because of local regulation or other things we haven't thought of. For the solar example, I am a big fan of what the city of Santa Monica is doing. They have a program called Solar Santa Monica, where the city recognized that there might be barriers for people to put together all the pieces, even though all the pieces exist. So, they went out and pre-qualified half-a-dozen installers so that people wouldn't have to shop among the various installers and wonder who was credible and knew what they were doing. That is a terrific service until this becomes more commonplace.

Right now, of course, you don't need a city to help you buy a refrigerator or an air conditioner, and I think that in the next few years you are going to find the same thing is true with solar. But at the moment, it is sometimes a daunting task, and that might prevent some people from doing it.

Given that AB 32, the bonds, and other measures have passed, how big is the appetite in California for investment in knowledge, supply, and equipment for green technology and innovation?

Whatever you believe the market for green tech is, or whatever your readers think it is, multiply that by 100. I remember getting the first desktop computer in 1980. People laughed at it because it had very few functionalities, and prognosticators were saying that someday every American household would have a home computer. An awful lot of commentators were saying, "That doesn't make any sense. Businesses might need them, but why would people want them at home?" Well, look at what has happened just 25 years later. Nobody could have predicted that kind of growth, and I think the same thing is true with green tech or clean tech today.

It is being driven by things like greenhouse gas policies, shortages of various kinds of fuels, concern about other things around the globe like terrorism and energy security, and, certainly, public health. I wrote a book called Lives per Gallon: The True Cost of Our Oil Addiction. In the book, I explain how many billions of dollars the public spends on health care through taxes-it is a lot like cigarettes. As people become more and more aware of these concerns, more and more policies are driven toward dealing with them; that pushes more and more innovation in the green tech, clean tech space. That in turn creates opportunities for both businesses and consumers.

You have choosen to affiliate with The Climate Group, an independent, nonprofit organization dedicated to business and government leadership on climate change? Why?

The Climate Group is one of the most effective spokespeople for climate change policy in the world because they help companies identify ways of becoming more energy efficient, and then they document how much money that effort is putting into their bottom line. In company after company, the things they do to reduce greenhouse gases are things that also save them energy and, in turn, save them money. That is good for shareholders, and it's good for the sustainability of the company. So it's good for everyone. The Climate Group has done a terrific job of taking those messages to other companies so they can adopt those policies.

They have been very strategic in linking many of these good business cases with good policy. So, in a very literal sense, last year as an example, they helped us pull together the meeting between Governor Schwarzenegger, Prime Minister Blair, and the CEOs of 30 of the world's largest corporations in Long Beach. That was an opportunity, as we were negotiating AB 32, to hear from companies, who gave us advice about what needed to be in that type of law so they could flourish while we were providing the environmental benefit we were looking for, and vice versa. The Climate Group is providing this unique service in joining policy makers at the highest level with boardrooms at the highest level.

When you joined the Schwarzenegger administration there was some grumbling from some in the party that you were too green and wouldn't be helpful to the governor. Do you take pride in having the governor on the front page of national news magazines and on the airwaves as the green champion of one of the country's greatest states?

Absolutely. I think all of us can take pride that these are policies that our state has supported. He has been a champion, making them even bigger and stronger and taking them out onto the world stage. That is leadership with tangible results. Many people have pointed out that California emits a small fraction of the world's greenhouse gases, so it doesn't mean anything if we are the only ones who reduce 80 percent of our emissions by 2050. That is nominally true, but with him on the covers of magazines and talking to other states and other nations, we are proving that California's efforts can be replicated in other parts of the world, and that is going to help solve these great environmental challenges.