The American Power Act and California’s AB 32
Some commentators have mistakenly concluded that if Sens. John Kerry and Joe Lieberman’s American Power Act passes, it will make California’s Global Warming Solution Act (AB 32) moot. This is wrong. The American Power Act preserves nearly all of California’s clean energy and carbon reduction policy tools. It would take away only one tool: the authority for a state — or regional — level cap-and-trade program. Although cap-and-trade is one important tool, the fact is that 80 percent of the carbon pollution reductions required by AB 32 are expected to result from other clean energy and carbon control polices implemented under that law. Whether or not the American Power Act is enacted this year, California can and should move full speed ahead with those measures.
The American Power Act allows and encourages California to move ahead with clean energy and global warming pollution reduction strategies.
California has long been a leader on environmental policies, including promoting cleaner energy and cleaner cars. In more recent years, California’s clean energy and global warming pollution reduction policies have made the state a mecca for investments in clean technologies that will power our future. The American Power Act recognizes California’s leadership, and it respects and protects our state’s ability to:
- Set its own carbon standards for vehicles, as well as other states’ option to adopt California’s standards (sec. 4141).
- Establish carbon pollution limits, clean energy, and energy efficiency programs for other sources that are more stringent than federal requirements; and,
- Establish overall statewide limits on global warming pollution, such as the targets in California’s AB 32.
The American Power Act preserves all of California’s carbon-curbing clean energy tools except cap-and-trade.
While the Kerry-Lieberman bill would protect most state powers to advance clean energy and curb global warming pollution, it singles out for permanent preemption one particular state authority. States would be prohibited from running cap-and-trade programs once the federal program to curb carbon pollution gets off the ground (sec. 2501, adding Clean Air Act sec. 806).
The effect of this provision on California, however, will be limited. As already noted, 80 percent of the carbon reductions expected under California’s Global Warming Solutions Act are coming from other clean energy and carbon reduction policies. Moreover, the American Power Act would provide California and other states that already have cap-and-trade programs with revenue from the federal allowance auction in place of revenue they would have raised by auctioning allowances at the state level.
Creating a national pollution limit is important so long as the national program is working well and achieving our national pollution reduction and clean technology goals. NRDC believes, however, that California and other states should retain the authority to limit carbon pollution by any cost-effective means, including cap-and-trade, if at any time the federal program and fails to achieve its goals.
The American Power Act builds on California’s leadership.
Using allowance value for the public good
While California has yet to finalize its rules statewide cap-and-trade rules, the consensus borne of three years of public dialogue among key stakeholders is that revenue from a cap-and-trade program can and should be used to help us transition towards a clean energy economy. This help can take the form of investing in energy efficiency, renewable energy, and research, development and deployment of new clean technologies, or providing refunds or rebates directly to consumers. Following California’s lead, the American Power Act recognizes this opportunity and provides for auction revenue — which will grow over time — to be invested in energy efficiency and in consumers.
Emission Performance Standard for coal plants
In 2006, California enacted legislation preventing new long-term investments in power plants that don’t meet a global warming pollution performance standard. This law sent a market signal to power developers in the West that dirty energy sources are not good long-term investments. The American Power Act picks up on this idea and establishes global warming pollution emission performance standards for new coal-fired electric power plants. It is not as aggressive as California’s but sends a signal to the national market that we need to move away from dirty energy and invest in clean energy sources.
The American Power Act unnecessarily threatens California’s coastline and marine life at risk.
For all the good it will do to curb global warming, the Kerry-Lieberman bill unwisely encourages new offshore drilling in previously protected areas. It does this by enticing east coast states with 37.5 percent of federal offshore oil and gas revenues, with absolutely no strings attached to the use of this money.
The American Power Act does give states the option to veto offshore leasing within 75 miles of their coasts (sec. 1204). However, states would face an uphill battle to achieve the veto: each state must pass a bill, and then the governor must petition the federal government, then the Interior Department must review and accept the petition, then the five-year leasing program must be revised. Meanwhile, leasing, seismic exploration, drilling, production and pipeline activities could go forward while states are jumping through hoops to get the veto. My colleague Regan Nelson has written in more detail on the offshore oil provisions.
Luckily, California is on the ball. Congressman John Garamendi sponsored the California West Coast Ocean Protection Act of 2010, a bill with 28 co-sponsors, which will stop all new offshore oil leases in federal waters on the West Coast. The bill has identical companion legislation in the Senate, sponsored by all six West Coast Senators, including California Senators Barbara Boxer and Diane Feinstein. Governor Schwarzenegger recently announced his opposition to new drilling off California’s coast despite the lure of as much as $100 million for the state’s coffers. However, we cannot be sure that the legislature will be able to act quickly enough nor that future governors will put the welfare of the state’s coastline and marine resources ahead of crass financial considerations. We are disappointed to see the bill encourage governors to trade off their states’ economic and environmental well-being with an activity that is so dangerous and deadly for our coasts, marine life, and fishing industry.
California continues to set the pace.
The bill as introduced by Sens. Kerry and Lieberman has several important implications for our ongoing work to build a clean energy economy here in California. We don’t have time to waste and we are working hard for Congress to act this year on comprehensive climate legislation, but California can and should move forward, regardless, with clean energy and global warming pollution reduction strategies and implementation of AB 32.
California has been and should continue to be a leader in putting clean cars on the roads, in giving Californians the option to pursue the cleanest forms of transportation and powering our homes and businesses with clean energy.