Global Warming Bill Stalls In Calif.

Schwarzenegger, Assembly Speaker Clash Over 'Cap And Trade' Emission Program

(AP)  Compromise over a bill that would make California the first state to cap industrial emissions of greenhouse gases remained elusive Wednesday as Gov. Arnold Schwarzenegger and legislative Democrats clashed over how businesses could meet the requirement.

Just days away from their legislative deadline, the governor and Assembly Speaker Fabian Nunez showed little appetite to budge on the most contentious point: whether California should have a so-called cap-and-trade emission program that would give affected businesses flexibility to meet their reductions.

The stakes are high for both sides. The Democrats supporting the bill want to toughen California's already stringent emission standards, while Schwarzenegger is seeking to burnish his environmental credentials in a Democrat-leaning state as he seeks re-election.

The Republican governor has made addressing climate change a centerpiece of his environmental agenda. He issued an executive order last year directing the state to reduce its projected greenhouse gas emissions by 25 percent by 2020, and last month signed an agreement with British Prime Minister Tony Blair to share technology and strategies to reduce emissions.

But negotiating amendments to the greenhouse gas bill has proven to be a delicate balancing act for Schwarzenegger. He also is trying address the concerns of the manufacturers, utilities, and oil and gas refineries that would be most affected by the bill.

Part of his strategy has been to advocate a pro-business approach to meet the emission caps. His administration has argued that industries need flexibility in the ways they can achieve the goals of the bill, which seeks to lower the output of carbon dioxide and other greenhouse gases.

For example, businesses that have a difficult time reducing their emissions can buy credits from other companies or from plants operated by their own company in other states or countries. The idea is that if such emissions are reduced in one area, everyone benefits.

Likewise, companies that can meet the tougher standards can make money by selling credits to those that cannot.

It is a system that is being tested in Europe and one promoted by Schwarzenegger.

“That is a very important concept because it inspires people,” Schwarzenegger said. “It incentives people to go quicker because there's money for them. There's a market.”

As it's currently written, the bill lacks assurances that businesses will be able to engage in such market-based activity, said Environmental Protection Agency Secretary Linda Adams. It only allows for the California Air Resources Board to consider the idea.

Democrats said they fear such a system could prove unworkable if California is alone in setting the tougher emission standards.

At issue is how California regulators would monitor a market-based system. It's unclear how they would be assured that plants in other states or countries that are trading credits with California businesses are actually reducing their emissions.

Nunez, D-Los Angeles, said he wants to work out differences with Schwarzenegger but said Democrats would take a hard line on the market-based amendments sought by the governor.

“I am not going to send the governor a bill the environmental community doesn't support,” he said. “The moment we start tearing away at the enforceability and the mandate to reduce carbon emission, then there's no reason to do the bill.”

Many companies are looking at the proposed caps and wondering, “How in the heck are we going to deal with these?” said Kent Stoddard, a spokesman for Waste Management Inc., California's largest landfill and recycling company, said

“There will be many industries that simply can't find the carbon reductions they need,” Stoddard said.

Carbon dioxide is a natural byproduct of the cement manufacturing process, for instance. Representatives of that industry argue that the current bill would mean cuts in production, which could lead to layoffs and lower revenue.

They say creating a market for emission credits — where other businesses make reductions on behalf of the cement industry — would achieve the desired reductions while allowing cement companies to continue operating in California.

Environmentalists say such a program shortchanges communities that are home to the industries that say they cannot meet the emission requirements. California already is the world's 12th largest emitter of greenhouse gases.

“It leaves our communities still having high emissions, when on a global level one may be able to see a global reduction,” said Angela Johnson Meszaros, general counsel for the Los Angeles-based California Environmental Rights Alliance.

On Wednesday, Schwarzenegger declined to say whether he would veto legislation that omits his market approach.

[edjohn66]

Possible compromise:

Trade carbon credits, but only in California where reductions can be enforced. California has one of the largest economies in the world; it seems as if there should be a huge market for carbon credits, even if the market is restricted to companies and/or facilities that operate in the state.