Energy Exchange

California continues setting the pace in the clean economy and is reaping tangible economic and environmental benefits from doing so. These are two of the key takeaways from a report released today by Next 10, which found that clean technology is fueling the state’s economic rebound and driving its efforts to cut climate pollution.

The 2012 California Green Innovation Index compiled by Collaborative Economics is the fourth annual report that tracks the “economic impacts of policies that help reduce state carbon emissions.” California’s Global Warming Solutions Act (AB 32) was among the policies cited as helping to drive the state’s economic growth.

According to the report, clean tech investments in California rose 24% between 2010 and 2011 to $3.5 billion. This represents 57% of all the venture capital (VC) funding in the country and 40% in the world. Additionally, California clean tech companies filed the most patents: 910 between 2008 and 2010. New York came in a distant second with companies filing 475.

Our solar industry did exceptionally well, attracting $1.2 billion, 62% of all U.S. VC funding in 2011. In part because of this investment, the Golden State reached a major milestone by installing 1,000 megawatts of solar capacity. Only five other countries in the world have hit this mark. Between January 1995 and January 2010, 1,503 solar businesses were founded here, an increase of 171%.

While this economic news is impressive, equally important were findings related to the environmental benefit: climate pollution fell even as the state’s population was rapidly expanding. By 2009, for every dollar of gross domestic product (GDP), California was producing 28% less carbon emissions than it did in 1990. These reductions happened as the population grew by 8 million residents. Specifically, since 1990, California’s per capita GDP expanded 16% while carbon emissions per capita fell. This is particularly encouraging as California prepares to launch a carbon market that will limit overall pollution in the state to 1990 levels by 2020.

This latest report further demonstrates that environmental policies lead to economic growth. We wholeheartedly agree with Doug Henton, CEO of Collaborative Economics, who said that by “setting the market rather than chasing it,” California’s leadership is “paying off in the form of investment, innovation, and growth.”

Today, the California Public Utilities Commission (CPUC) approved the sale of Southern California Edison’s (SCE) partial interest in the Four Corners coal-fired power plant to the Arizona Public Services Company.

This sale is another indication that California’s landmark climate and energy laws—including: AB 32, which puts a price on carbon; SB 1368, its electricity performance standard; and SB 2, its 33% renewable portfolio standard—are working to encourage state utilities to find ways to move toward cleaner energy sources, cut pollution, protect ratepayers, and maintain reliability.

According to long-term resource plans and investment initiatives, SCE intends to replace the 800 MW of power that was generated near the Four Corners landmark in northwest New Mexico with lower-carbon resources such as natural gas, renewable energy, and energy efficiency – all of which can create in-state jobs and economic activity.

Once the transaction is final, California will have dedicated contracts from four major coal-fired plants:

1. Navajo (Arizona);
2. Reid Gardner (Nevada);
3. San Juan (New Mexico), and;
4. Intermountain (Utah).

Of course, adherence to the California Environmental Quality Act and other applicable state and federal environmental standards must be observed in connection with investments or authorizations related to the sale of an emissions-generating source. Such provisions are necessary to ensure that documented emissions reductions are real and achieve the environmental benefits desired.

When this ownership transfer is complete, SCE’s contribution to California’s coal shadow will drop by approximately 5 million tons of CO₂ annually, an amount greater than the largest in-state source of greenhouse gas pollution. (EDF first highlighted California’s coal shadow, which is the impact of coal-produced power sold into the state, in a 2005 report.)

EDF looks forward to working with the CPUC and California utilities as environmental regulations are used to reduce our state’s future coal shadow.

*Legal disclaimer: Nothing in this post is intended to comment on or provide findings or conclusions related to future or pending evaluations of compliance with federal or state law.

Speeding the development of clean energy in California, Oregon, Washington and British Columbia can generate more than one million jobs and $142 billion in gross domestic product (GDP) by 2020, according to a report released Tuesday.

It is the latest study showing that environmental policies can deliver broad economic benefits across industry sectors and to entire regions.

The report is a forward-looking assessment of how the West Coast mega-region can combine efforts to gain powerful competitive advantages. Among the key findings:

• By 2020, the region’s clean economy could grow by more than 200% through the adoption of strategic policy measures, which represents up to $95.5 billion in new GDP contributions.
• It is critical to put a price on carbon and use market-based approaches to drive innovation and investments that create long-term, sustainable employment.
• The sectors with the highest job growth potential are: energy efficiency and green buildings; environmental protection and resource management; and clean transportation.

The West Coast Clean Economy Report was authored by GLOBE Advisors and The Center for Climate Strategies and released at the GLOBE 2012 Conference in Vancouver, Canada.

In late December, a federal court district judge in Fresno ruled that California’s Low Carbon Fuel Standard (LCFS) was unconstitutional because it violates the limits imposed on states by the Commerce Clause of the United States Constitution. The ruling halted its enforcement pending appeal to the U.S. Court of Appeals for the Ninth Circuit.

The suit was filed by refiners, truckers, and fuel production companies – most of which have the bulk of their operations out of state and would rather litigate than innovate, putting profits before people. It is yet another industry attack on the state’s landmark climate and energy law, AB 32, which consists of measures such as the LCFS that will be used to reduce California’s greenhouse gas pollution to 1990 levels by 2020.

California’s LCFS is a scientifically credible standard that was carefully designed to cut climate change pollution, protect and improve public health and drive innovation that delivers economic benefits. These are among the key reasons why Environmental Defense Fund joined California and three other environmental organizations in an appeal of the suit asking to keep the LCFS intact.

Cutting climate pollution

As designed, the LCFS reduces the amount of carbon released during the production, shipping and use of transportation fuels sold in California by 10% between now and 2020. This “lifecycle” approach to managing emissions from fuels was pioneered by Argonne National Labs and is the accepted standard used by the federal EPA and other states and nations.

Improving air quality

California has some of the worst air quality in the country. In addition to fighting climate change, the LCFS cuts pollution that poisons our air and water and results in respiratory ailments and diseases that cost us tens of billions of dollars a year in health care costs. By facilitating newer, less polluting transportation fuels, the LCFS can help California finally achieve attainment of federal health standards for air quality.

Driving innovation

The standard would deliver significant benefits to the state and national economy. California is home to the world’s most advanced biofuel and electric car companies, hydrogen infrastructure, and transportation fuel research institutions. These entities operate here because California has created an environment where scientific enterprises can prosper, and in the case of the LCFS, earn a return on investment by reducing pollution cheaply and quickly. Over the next decade, the standard provides new opportunity for innovators in and out of California to reap the rewards of developing cheap and lasting alternatives to gasoline.

The deep-pocketed oil industry can easily afford to protect its profits. Yet, as The New York Times recently noted in an editorial under the headline, ‘California’s Persistence,’ the industry is up against a state that ‘has a long and productive history as a leader in environmental policy, requiring cleaner cars and power plants and more energy-efficient appliances.’

We are confident that this standard will be restored on appeal, enabling California to continue doing what it excels at: driving advances in energy that grow the economy and protect our environment.