You may have heard that California recently passed the nation's first limits on greenhouse gas emissions from power plants and other businesses. But you may not have heard of companion legislation that would force all western producers who want to sell electricity to California to limit their carbon dioxide as well.
GELLERMAN: It’s Living on Earth. I’m Bruce Gellerman.
California Governor Arnold Schwarzenegger is set to sign a landmark piece of legislation.
It would make the state the first in the nation to limit the amount of carbon dioxide that refineries, power plants, cement factories and other businesses can emit into the atmosphere. But there's another, less publicized piece of legislation also awaiting Mr. Schwarzenegger's signature. This bill would effectively extend the reach of California’s CO2 policy to neighboring states. With me to discuss this bill is Ralph Cavanagh. He’s co-director of energy policy at the environmental organization, The Natural Resources Defense Council. He's been closely watching this legislation.
CAVANAGH: Glad to be here.
GELLERMAN: So, exactly what does this bill do?
CAVANAGH: This bill establishes a policy for power plants that want long-term contracts with California utilities. It says basically that if you want Californians to pay for your power over the long haul you have to minimize your global warming pollution or at least you have to limit it to a level no greater than that of a typical efficient, modern, gas-fired power plant.
GELLERMAN: Well, I know, Ralph, if California were a country it would be what, the 12th largest emitter of greenhouse gases in the world. How much of those gases are coming from power plants outside the state?
CAVANAGH: So, for about half of the global warming pollution associated with power generation meeting California’s electricity needs is coming from out of the state, half of the pollution.
GELLERMAN: So, I’m wondering what the effect of this might be. There are, what, dozens of coal fired power plants in the works on drawing boards. The United States is on the verge of a coal plant boom. If the Governor of California signs this could the state effectively influence how clean the next generation of coal fired plants are?
CAVANAGH: Certainly this could effect what the electricity generation sector looks like over the long term because remember what we are talking about is influencing investments in power generation that last for decades. Coal plants often live 60, 70 years or more.
And California’s ability to send a signal that it wants to place its long term bets on cleaner generation, and on energy efficiency, certainly could be influential not just in the West, but nationally, as other utilities move in the same direction. But California, here, is acting in its own enlightened self-interest. It’s not trying to impose a policy on others, it’s not trying to engage in some kind of altruistic gesture. It’s protecting its own customers from future costs of environmental regulation.
GELLERMAN: How would this bill help protect California from future costs?
CAVANAGH: What you see, if you see a giant new coal plant, one of the things you’re looking at is enormous exposure to future costs when federal regulations of global warming pollution lock-down. We don’t know exactly when that will happen, but it’s obvious that it’s going to come. It is only prudent for states to begin planning now to minimize cost of exposure to future regulatory action like that. And to make sure that if there are long-term investments that their customers are being called upon to make, that those investments are in a diversified and cleaner portfolio of electricity resources that minimizes costs associated with future regulation of global warming pollution. That’s what California’s doing, that’s what all states should be doing now.
GELLERMAN: I don’t think there’s any question that California can regulate its own greenhouse gas emissions, but I would assume that someone is going to look up and say you’re crossing state lines here, and that has nothing to do with what California wants.
CAVANAGH: But, again California is not crossing state lines in terms of the investments at issue here. California is simply saying that if you want us to pay for the power plant, here’s what we need to see in the power plant. That seems only reasonable. It is after all our money. If other states don’t want to follow those guidelines, they can obviously look for financing elsewhere. What we’re making sure is that our investments are prudently made in technologies that minimize reliability and financial risks to our California customers.
GELLERMAN: How difficult was it to pass this bill?
CAVANAGH: Well, this bill in fact has the support of California’s major utilities. We really aren’t breaking new ground with this bill. What the legislature is doing is embracing and establishing on a statewide basis a policy that was already well developed by our energy agencies.
And I’ll tell you, I think there is widespread interest in this in other Western states in particular because people understand there are real financial risks associated with global warming pollution going forward. Utilities across the West are starting to factor those risks directly into their own resource planning, utilities like PacificCorp in Utah and Oregon, the Idaho Power Company, Northwestern Energy in Montana. This is an idea that has broad support, and increasingly wide interest across the region. I don’t view this as a hugely controversial measure. I do view it as a very strong common sense effort to minimize financial costs and liability risks for California electricity users.
GELLERMAN: Ralph, how sure are you that Governor Schwarzenegger is going to sign this bill?
CAVANAGH: I’m very hopeful, but it’s the Governor’s call and he hasn’t said what he will do.
GELLERMAN: Ralph Cavanagh is co-director of the energy program at the Natural Resources Defense Council. Ralph, thank you very much.
CAVANAGH: Sure, thank you.
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