California Releases Climate Plan

by William Yeatman on October 20, 2008

California is considered the national leader on climate policy because of Assembly Bill 32, the Global Warming Solutions Act, which Governor Arnold Schwarzenegger signed into law in 2006. The act directs a California agency, the Air Resources Board (CARB), to formulate a strategy that would reduce the state’s greenhouse emissions to 1990 levels by 2020, a thirty percent decrease from business as usual.

This week CARB released the final version of its plan to achieve the emissions cuts, and as we have noted before, it is full of wishful thinking and policies that have already failed.

California now has 3 years to implement a climate plan that is designed to make energy more expensive so consumers use less of it. Then again, there’s no guarantee that California will follow through with its climate strategy. The Golden State could do what the European Union is now doing in the face of economically painful climate regulations: retreat (see “Around the World,” above).

Dodging climate commitments will be an attractive option, given the state of California’s economy. This week the Wall Street Journal reported that California is especially vulnerable to the financial crisis because it is home to so many housing bubbles. Citizens of California, moreover, carry more debt that citizens of other States. That applies to California government, too. Thanks to plummeting housing prices and depressed consumer spending, California faces a budget crisis. According to the article, California’s public debt is likely to surpass anything the State has known before, even the $38 billion deficit in the wake of the dot-com bust.

In fact, the California government narrowly averted a financial meltdown this week by issuing $4.5 billion in short term bonds to help meet a $7 billion shortfall through spring. Before the emergency issue, California Governor Arnold Schwarzenegger (R) sent a letter to U.S. Treasury Secretary Henry Paulson asking the federal government for a bailout.

In this economic environment, it remains to be seen how far California will follow through with its costly climate commitments.

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