Renewables: California sunshine is source of power

While the rest of the US uses employs innovative new extraction techniques to rediscover its love of fossil fuels, one place continues to fly the flag for renewable energy: California.

Supporters of renewable energy and tougher curbs on emissions could ask for no better friend than the Golden State, which has blazed a trail for environmental causes for the last three decades. Starting with legislation to make refrigerators more energy efficient and subsequent standards for buildings and auto-efficiency – which were adopted by the US government – the most populous US state is about to embark on one of its boldest moves yet.

The 2006 passage of the state’s “Global Warming Solutions Act, more commonly known within California as Assembly Bill 32 – or AB 32 – committed the state to a tough renewable energy target: a third of all energy consumed by the state in 2020 must come from renewable sources. The bill also contained a requirement that California establish a cap-and-trade programme and after six years of fine-tuning, America’s first carbon credits market is about to open to for business.

“Plenty of stuff happens in the energy and climate change world which is symbolic,” says Michel Dicapua, head of north American analysis at Bloomberg New Energy Finance. “But what is happening in California is meaningful.”

The cap and trade programme will be mandatory for companies with California-based facilities that produce 25,000 tonnes or more of carbon dioxide. The state’s Air Resources Board will distribute a limited number of tradable permits equal to the emissions allowed under the cap. Over time the number of available credits will dwindle, making it more expensive to exceed the cap.

There could be big implications for energy producing companies with California-based operations that qualify for the program. “It’s an important, strategic decision for them,” says Mr Dicapua. “How far out do they need to hedge their production?” The launch of the market is “an incredible development,” he adds. “At a federal level the idea of regulating carbon through a market was given up for dead two years ago. But California is a maverick state and when it comes to energy policy it is prepared to go it alone.”

It can do this thanks to the size and power of its economy: it would be the world’s ninth largest, if it was a separate country. It continues to struggle with budget deficits – and face unfair comparisons with the economic plight of Greece - but California continues to pack an economic punch and has a track record of going its own way, even when faced with opposition from the US government. When the US refused to sign up to the Kyoto protocol, California set its own vehicle emissions standards and sued the Bush administration for the right to implement them. Its commitment to reduce carbon emissions to 1990 levels by 2020 was widely copied by other states while its vehicle standards have been adopted by Barack Obama’s administration.

On most issues, California has a sharply divided electorate: the state leans Democratic but there are plenty of conservative Republicans in inland areas away from the coasts. However, with some of the most revered national parks and beautiful coastline in the US, most voters agree on action to protect the environment.

Environmental protection enjoys strong bi-partisan support in the state: its global warming act was passed by a Democratically-controlled state government and signed by its former Republican governor, Arnold Schwarzenegger.

“A variety of factors motivate our policies in California,” says Matt Rodriquez, secretary of the California Environmental Protection Agency. The state’s balmy climate and year-round sunshine helps maintain its economy, he says. “We have a $102bn tourism industry and a $37.5bn agriculture industry.” This means California has much to lose if climate change accelerates. “We are the primary manufacturing state in America. We are concerned about greenhouse gas emissions and whether we can do things more efficiently.”

The state’s size means it can be a test-bed for expensive concepts and ideas – such as solar energy. The appetite for solar technology within the state helped bring down the cost of production, making it easier for solar energy providers and developers to take their products to other markets. “California helps provide the economies of scale that lower the cost for the rest of the country,” says Mr Dicapua.

Innovative fossil fuel extraction may be very much in vogue but environmental protection advocates will hope California continues to be the flag bearer for renewable energy. After all, it has a strong track record it hopes to maintain. “California has doubled in population in the last 40 years,” says Mr Rodriquez. But our energy use has remained flat.”