Will California's landmark emissions legislation fuel winds of change across the country?

Christmas came early this year for the California Air Resources Board.

With the recent passage of the landmark California greenhouse gas emissions legislation, the board was designated the governing body to establish the rules and regulations of the bill and eventually enforce and monitor them.

"It's like Christmas Eve around here. Everyone's really excited to go downstairs and see what's under the tree, but everyone's nervous about what's going to be inside the box," according to Jerry Martin of the ARB.

The ARB has led the country in air resource management for the past four decades and is viewed as one of the top resource management agencies in the country. Currently, requests to work on the project have hit world wide heights according to Martin, with calls filtering in from environmentalists across the globe.

The California Global Warming Solution Act of 2006, (AB 32), is an ambitious piece of legislation that many claim will set the standard for the nation as a model on how to cap emissions. It comes at a time when national concern over global warming has reached a new apex, in part due to the release of Al Gore's documentary on the subject, An Inconvenient Truth.

But legislation alone won't secure California's place in the pantheon. The ARB in particular has its work cut out for it before the state can begin to boast. The first task­—adopting statewide standards that equal the state's 1990 emissions levels—will require an open public process to determine cost effectiveness and technological feasibility among other things. And whenever the argument turns to dollars and practicality, you can expect some bumps in the road. To that end, the ARB was not the hands-down choice to regulate, develop and monitor the legislation. In fact, Governor Schwarzenegger wanted a new board made up of agency heads and administrators to oversee the requirements of the bill.

With several different agencies currently involved in emissions control, there is already an amount of cross regulation. A concerned business community thus argued that the Air Resource Board should be the governing body for the new legislation, according to a spokesperson for Assemblywoman Fran Pavley( D-41st), co-sponsor of the bill.

Another important compromise settled the question on whether or not to allow a market for "pollution rights." The ARB now has the ability to allow trading for emissions credits. This is a booming business. In the European Union's greenhouse gas market, over $8 billion in emissions credits were negotiated the first year, 2005.

Evolution Markets, Inc. a risk-management advisory company based in White Plains, NY, structures emission credit trades and sees a developing market as the only way to meet emission caps efficiently.

"We fully support the provision. It is by far the only way to meet the bill's goals. The ARB needs to detail a multi segment program that involves various players and industry" said Jason Patrick a broker with Evolution Markets, Inc.

Credits, in the emissions market, are given for decreasing greenhouse gases. This however,
often takes the retooling of a plant, factory or refinery, which frequently costs substantial amounts of money.

As an incentive to reduce the emissions, industry receives credits for their investment in new technology. These credits can then be traded to other businesses that need them in order to emit heat trapping gases such as carbon dioxide, methane, nitrous oxide and others. According to the bill, the greenhouse gas emissions limit signifies an authorization during a specific year to emit up to a level of gases specified by the board, expressed in tons of carbon dioxide equivalents.

The bill is really a "shell bill," according to BreAnda Northcutt of the California EPA. "It sets up the parameters, but the bill requires the ARB to develop the rules, regulations and market-based compliance mechanisms."

Although the goal is to cut the state's industrial emissions, it's also heralded as a boost for clean air technology. Craig Noble of the Natural Resource Defense Council, one of the supporting agencies of the legislation, believes that clean-air technology is the next frontier for the state's entrepreneurs..

"This will spur new jobs and industries. Research for new appliances for the home that are more efficient and save more energy are already being developed. A lot of the tools are already here. This is a big deal for California. First it was high-tech, then bio-tech, next it will be clean air tech. We are in the clean air-tech era," Noble says.

It may be Christmas Eve at the ARB but there is little time to celebrate. The board has until June 30, 2007 to publish a list of early reduction measures that will be implemented prior to adoption of the complete standards.

However, the ARB has until January 1, 2009 to prepare and approve the entire plan for public scrutiny. Once that process is complete, industry has until 2020 to meet the new standards.

Is it a good plan? Noble thinks so. "It is a big deal. We will lead the country in greenhouse gas emission legislation, and this is gong to become a model for other states. This legislation is an indicator that Americans are waking up to global warming initiatives. It's a great plan."

Ann Notthoff, the lead negotiator from the Natural Resource Defense Council summed it up best. "I think the bill is great for California, but also lights a fire across the country so that other states can adopt similar legislation. This may wake up the federal government to realize global warming is a serious public problem. If all fifty states use this as a model, maybe Congress will wake up too."

About John Foley

John Foley is a freelance journalist, writer and editor from San Francisco, California.