Best 'fix' is a veto - Emissions bill solves nothing, adds headaches

At this writing, Gov. Arnold Schwarzenegger, Assembly Speaker Fabian Núñez and other lawmakers are haggling over the final details of AB 32, a sweeping measure meant to establish California as the world leader in reducing the greenhouse gases blamed for global warming. Schwarzenegger wants not just hard caps on emissions but a market-based system in which incentives are created for businesses to reduce emissions through trading of pollution credits. Núñez is lukewarm on such a “cap and trade” system.

Here's our recommendation to the governor: Quit negotiating and simply veto whatever measure comes your way.

If AB 32 is enacted – whether or not it includes concessions to the governor – California will have committed a historic mistake, for two distinctly different reasons.

The first is that just as with the 1996 energy “deregulation” overhaul passed by lawmakers with little dissent, AB 32 and a companion bill set out to change a vast chunk of our economy with legislation that has barely been vetted. This invites unforeseen consequences of the sort we saw in winter 2000-01 when faux “deregulation” created an energy crisis marked both by Enron's fleecing of consumers and frequent power shortages. By contrast, well-crafted deregulation measures have done wonders in Texas and Pennsylvania.

Consider that Democrats intend to ban California utilities from buying power from out-of-state generators that don't meet California standards. These are the same generators that state residents depend on to provide their excess power and keep California's lights on during our spikes in usage. Now suddenly their help isn't good enough for us if it doesn't meet the standards of legislators who want to make a statement about California's commitment to fighting global warming? We suspect that if this posturing kept the air conditioning off on a hot summer day, it would inspire profanity from El Centro to Redding.

The second big mistake being made here is Schwarzenegger's and Núñez's continued advocacy of the fantasy that a hard cap on emissions not only won't hurt California businesses by adding a unique cost not borne by firms in other states and nations, but that it would benefit them by spurring innovative technologies of just the sort the state specializes in.

But the pseudo-academic reports backing up this claim don't assert that the export market for such emission-control technologies will be so lucrative they will lift the entire state's economy. Instead, they depend on the assumption that, voila, just like that, California will be able to come up with massive increases in energy efficiencies. Researchers here and everywhere have been hunting for such breakthroughs since the first oil price shock in 1973, and now they are supposed to come easy?

Meanwhile, the evidence demonstrating the harsh toll the emission caps would take on California businesses keeps growing. Farmers, dairies and winemakers all warn that their narrow profit margins could disappear. Typical of many heavy industries around the state, owners of a cement plant in Mojave have already delayed plans for a $400 million expansion and are looking to move to Nevada.

How is it remotely rational to create such economic dislocation in service of legislation that Núñez himself admits won't reduce global warming unless all the major economies in the world – including balky China and India – undertake similar efforts? If California's moral crusade accomplishes nothing but costing some Californians their jobs, how is it moral?

It is more obvious than ever that a coordinated global approach is the key to addressing global warming – not undertaking grand, self-congratulatory gestures that do nothing but punish Californians unlucky enough to work in farms and factories. This is why Gov. Schwarzenegger should veto AB 32, not strive to make it less punitive. Unfortunately, the governor apparently would rather be remembered as a Green Giant than worry about the Californians who lose their jobs as a result.