EE.UU. : November 17, 2010
The passing of the recent US elections marked the defeat of California Proposition 23 that if passed, would have delayed Assembly Bill 32 (AB 23) – the “Global Warming Solutions Act of 2006” which intends to reduce GHG emissions in the state to 1990 levels by 2020. Supporters of Prop 23, dubbed the “California Jobs Initiative”, argued the AB 32 will do more harm than good and inevitably cause households to directly face higher prices for electricity, natural gas and gasoline and also indirectly as businesses would pass along higher fees onto the consumers for the cost of GHG reduction.
The major supporters of Prop 23 were oil refiners Valero Energy and Tesoro totaling nearly $5.5 million in donations of the $9 million collected in supporting the initiative. These companies have argued that the enactment of AB 32 will drive up the cost of gasoline (by some predictions as much as $5 per gallon) as well as kill jobs as gasoline production would shift to other areas.
Utility companies, for the most part, took no position in the debate projecting that the cost of AB 32 was marginal for them with most of the increases being passed along to the consumer. They estimate that AB 32 will cost the average household an additional $30 to $120 per year. They have also been preparing for AB 32 over the past several years by focusing on natural gas generation and efficiency measures.
Complying with AB 32, the California Air Resources Board and stakeholders have worked together to implement a number of rules for regulators such as buying one-third of their power from renewable sources by 2020 and forcing refiners to alter gasoline blends so they will emit 10 percent less carbon when produced. Under the cap and trade program, the Board will generate allowances for close to 90 percent of the 2012 projected emissions requiring companies to either improve efficiency or purchase additional allowances.
Uncertainty of AB 32 comes with the passage of the lesser known Prop 26. Heavily endorsed and funded by the alcohol, tobacco and oil industries, Prop 26 increases the legislative requirement from 50 to 67 percent for any new fees. Under California law taxes can only be raised in the state by a two-third majority vote in the legislative branch. However, as a means of getting around this requirement, the government would introduce “fees” rather than taxes on certain products. The enactment of such fees only required a simple majority. Prop 26 closes this loophole making it more difficult to increase funding for many of the state’s regulatory bodies including the California EPA. While this does not affect the Global Warming Solutions language, it certainly may affect the ability of regulators to enforce AB 32.