Energy Exchange

Late yesterday, a three-judge panel in the 9^th Circuit Court of Appeals granted an important stay motion in favor of California and its Low Carbon Fuel Standard (LCFS). The court’s decision allows the state to move forward with vital protections for human health and the environment that will strengthen California’s clean energy economy and improve our energy security.

The LCFS is one of California’s most ambitious and innovative climate change regulations to date. It is among 70 measures adopted under AB 32 (the Global Warming Solutions Act of 2006) that will be used to reduce emissions to 1990 levels by 2020. The standard calls for reducing the carbon content of fuels by 10 percent by 2020, which is expected to reduce 15 million metric tons of greenhouse gas pollution per year by 2020. Some of the cuts will come from improvements in the way traditional oil and ethanol feedstocks are produced, processed and delivered to consumers. Other cuts will come from advancements in breakthrough technologies such as electric cars and renewable fuels that dramatically cut toxic air contaminants and further diversify our fuel supply with locally generated energy sources.

How LCFS Works

The standard creates a flexible system that allows fuel suppliers to comply by either documenting reduced emissions in their fuel production pathways (using a science-based lifecycle emissions model) or by purchasing credits from suppliers that have reduced emissions below a predetermined threshold. This approach rewards innovative solutions that cut emissions as quickly, cheaply and extensively as possible, using a scientifically credible emissions reporting and trading platform.

How LCFS Provides Energy Security and Protection from Fuel Price Surges

California drivers burn about 16 billion gallons of gasoline and 4 billion gallons of diesel fuel every year and emit, in aggregate, approximately 170 million tons of greenhouse gas emissions. Much of this fuel is sourced from California oil fields (approximately 200 million barrels per year), though more than 50 percent is imported from the Middle East, South America and Alaska. These imports make our economy vulnerable to price swings and shortages driven by production changes and politics.

We blogged yesterday about the latest Next 10 report that analyzes the economic impacts of policies designed to help California reduce its climate pollution. It notes California’s record-breaking pace on clean energy funding and innovation, while reducing pollution and growing its economy. Since 1990, California’s gross domestic product (GDP) expanded 16 percent while carbon emissions per capita fell.

Today, a new report released by Environment America finds that the 10 Northeastern states in the Regional Greenhouse Gas Initiative (RGGI) have seen similar results. The states cut per capita carbon emissions 20 percent faster than the rest of the nation from 2000-2009 while regional per capital GDP grew 87 percent faster.

Add this good news to the findings of a report released last November—which estimated that investments made by RGGI states in its first three years of operation added economic value worth more than $1.6 billion (nearly $33 per person) and 16,000 jobs—and you have further proof that strong environmental policies deliver economic benefits to states that lead on climate change. That is worth celebrating on Earth Day.

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.”