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 September 07, 2006
California to set emissions caps

 California, USA, (GLOBE-Net) -- California lawmakers have reached a deal that will require industries in that state to lower their carbon dioxide and other greenhouse gas emissions to 1990 levels by 2020. The Global Warming Solutions Act of 2006 passed the Senate with a vote of 23-14, cleared the State Assembly by a margin of 46 to 31, and will become law once it is signed by Governor Arnold Schwarzenegger. The Republican Governor's signature is assured, as he negotiated details of the plan with state Democrats who initiated the bill.

The first emissions limits will take effect in 2012 for industries such as cement manufacturing, energy utilities, and refineries. The "market-based" limits will decline over time, and will be the most stringent in North America.

The 2020 emissions cap will represent about a 25 percent reduction from forecasted levels, or a cut of approximately 145 million tons. The limit is consistent with a goal set by Schwarzenegger last year.

The California Air Resources Board (CARB), which will control aspects of the plan, is required to adopt regulations to require the reporting of emissions from significant sources by 2008.

The bill also includes language that should encourage the development of a system that will allow companies to buy and sell carbon credits, though it does not require such a scheme. Instead, the language allows CARB to "adopt regulations on the use of market mechanisms to achieve greenhouse gas emission reductions". Governor Schwarzenegger had asked that the bill include a requirement for trading, and businesses also want a market-based system.

The text of the Global Warming Solution Act of 2006, or Assembly Bill 32, is available, click here.

A trading system does seem likely, given that the Governor recently agreed with British Prime Minister Tony Blair to develop a cross-Atlantic carbon credit market.

CARB will also oversee voluntary emissions reductions, and will be able to 'give credit' to early actors. One provision Schwarzenegger pushed for was an option to halt the caps for up to one year in the even of 'catastrophic circumstances or threat of significant economic harm'.

In combination with the California Solar Initiative, a US $2.9 billion plan to promote solar energy, the global warming bill is expected to strengthen California's leadership position in environmental technologies.

The initiatives being undertaken in the state will support a thriving market for all forms of clean energy technologies, from energy efficiency upgrades and power plant improvements to hydrogen cars and renewable energy.

The University of California, Berkeley, published a study that predicts the state's climate legislation will add US$60 billion to the economy and 17,000 jobs annually. If innovation incentives are also offered, those figures will increase to US$74 billion and 89,000 new jobs annually, the study said.

Gasification systems, carbon capture technology, and air pollution filtration should be in demand from electric utilities and independent power producers. Almost half of California's electricity comes from natural gas, while dual fired plants that can produce electricity using two or more input fuels make up ten percent of supply. Coal and petroleum accounted for 0.7 percent and 1.2 percent respectively, as of 2004, reports the US Energy Information Administration.

Renewable energy is sure to be a strong growth area, with solar and wind power making gains. With the Governor supporting the Hydrogen Highway project, hydrogen cars and power stations could also see tremendous growth. BP and GE have already announced plans to construct a $1 billion, 500 MW hydrogen-fuelled power plant that would supply power for around 325,000 homes.

Many have cited the California legislation as an important step for the United States in combating global warming. Though the federal government has rejected the idea of emissions caps for fear it would curb economic growth, state governments are stepping in with caps of their own. A group of Northeastern states recently finalized the rules for a 'cap-and-trade' plan.

The California legislation is an acknowledgement that climate change is a problem that requires action and can spur the growth of environmentally-friendly technologies. Technology providers in the state will now be able to deploy their emissions-reduction solutions and create economic growth through innovation.