Thursday, September 7, 2006
The past few years have been a hard time for optimists. In this age of terrorism, war, economic slump, global warming, etc., rosy-colored glasses have fallen way out of fashion. But here we have something we have to feel good about.
The landmark agreement struck in Sacramento last week, which will require industries in the state to reduce greenhouse gas emissions in an effort to curb global warming, is not going to produce any immediate change in the weather, or save the world by itself. It will, in fact, cut less than one-half of 1 percent of the world’s greenhouse gas emissions. But it could mean big changes in the way things get done, here and elsewhere.
Technologies called into being by this breakthrough could be made available worldwide.
In announcing the deal, California’s major dailies all focused on the initiative’s economic consequences. The San Francisco Chronicle, in its lead, wrote that the deal “could dramatically reshape the state’s economy.” The LA Times reported that “the state’s basic industries, including utilities, oil refineries and steel mills, can expect to make major changes in how they do business.”
This is a good thing, but it scares some people. Republicans in Sacramento, with the crucial exception of Gov. Arnold Schwarzenegger, refused to support the plan, claiming that the changes necessitated by this new law will be catastrophic. As reported in the Chronicle, The Competitive Enterprise Institute, a conservative think tank, issued a press release titled “California votes to join the Third World,” warning that “it is unfortunate that California’s state government would be pushing such a wrong-headed policy at a time that entrepreneurs are already fleeing the state, due to some of the highest electricity and gasoline prices in the country.”
Fearless in the face of global climate change, these doom-and-gloomers are terrified of the risk that comes with making a necessary change in business strategy. Yet PG&E, which will be profoundly impacted, supports the new law, as do many business leaders in the state. These optimists believe that this decision sets California in a new direction toward creating a new clean-tech industry. They believe this news heralds a challenge to business that will lead to the birth of new technologies, and promises an economic response that could rival the high-tech boom.
“It’s a fundamental change to the economy,” said John Doerr, a partner in the hugely powerful Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers. “All of a sudden, innovators, entrepreneurs, well-managed organizations, inventors in Silicon Valley and the CEO of Wal-Mart are motivated by profit to reduce carbon emissions.”
In fact, the train has already left the station. Typically, private industry is a few steps ahead of the government—even the California government—on this issue.
John Browne, CEO of the London-based energy giant BP, has been cutting his company’s carbon emissions by 10 percent since 1997. (When he announced that goal at Stanford University, his alma mater, it was the first time an oil company executive had admitted that fossil fuels were contributing to global warming.) BP is planning to build a $1 billion high-tech plant at a refinery in Southern California, where 90 percent of the carbon emissions will be pumped underground into nearby oil fields. BP supported the new clean energy initiative, as did Calpine, based in San Jose, which operates power plants nationwide that burn natural gas, and a few that tap geothermal energy.
These companies are no doubt motivated primarily by the
idea that they can make money on this new deal. And that’s
just fine. The state’s Air Resources Board, which will be
charged with enforcing the new standards, produced a report
last year that estimates that the need to limit greenhouse gas
emissions and develop alternative energy sources will create a
new industry in California—producing 83,000 jobs and $4
billion in economic growth.
• • •
It would be pessimistic to focus only on the potentially positive economic consequences, and ignore the broader implications of this plan, which could signal a deep change in direction for the world’s energy policy. California does in fact wield enough economic clout to dictate policy for the nation, and this move could mean a real change. New technologies called into being by this political breakthrough could be made available nationwide and worldwide. States and nations could be inspired to take bold steps to solve a problem that only last week seemed too big to confront.
Maybe this is a time to believe good things are possible.