Here is a press release that came my way outlining key points in California's plan to address climate change. In the next two months the state legislature, with the support of Governor Schwarzenegger, are set to enact two new laws that would make it North America's leader in addressing global warming. Key points include:

• Strict targets for heavy industry, electric utilities and refineries to cut greenhouse gas emissions by 25% by 2020.
• Prohibiting all state utilities from signing long-term contracts with coal fired power plants.

Tabled by the Democrat controlled legislature, the laws are key elements in addressing Schwarzeneggers commitment of bringing California to 1990 emission levels by 2020.

13 Jul 2006 - California Gets Primed To Enact Greenhouse Gas Limits

By Mark Golden
Of DOW JONES NEWSWIRES

SAN FRANCISCO (Dow Jones)--California is likely to enact two laws in the next two months that together would go far beyond anything any other state has done to address global warming.

Though details are still being worked out, the Democrat-controlled state legislature is expected to pass the bills when it reconvenes in August. One bill would force California's heavy industry, electric utilities and refineries to cut greenhouse gas emissions about 25% by 2020, the level in 1990. The other bill would effectively prohibit all of the state's utilities from signing long-term contracts for baseload power generated by coal-fired power plants, at least until such plants operate with equipment still under development to control carbon dioxide. California doesn't have any coal-fired plants, but its utilities get much of their power from coal plants in other states.

Though the proposals could be substantially rewritten by the end of August, people involved in the process expect Republican Gov. Arnold Schwarzenegger to get bills on his desk that he can, and will, sign. Schwarzenegger, who faces re-election in the fall, has staked a claim to a national leadership position on the issue of combating global warming. While the bill on coal-fired plants is seen as almost a sure thing, sponsors of the broader greenhouse gas bill are still in talks with Schwarzenegger's staff.

"While not a done deal, the odds are good that the cap on emissions will pass both houses," said Jim Marston, head of state global warming efforts for the national group Environmental Defense. "We're making progress."

The 1990-level emissions cap would be the toughest greenhouse gas requirement nationwide, Marston noted. The limits on long-term contracts with coal-fired plants would match the most aggressive actions to date by some northeastern states.

Companies Fight For Changes

"These bills together or separately would be historic," said Wendy Pulling, director of environmental policy for PG&E Corp. (PCG), which is fighting for changes to both bills. PG&E, like Edison International's (EIX) Southern California Edison, would prefer action on global warming to happen at the national level, though PG&E recognizes California's leadership role on environmental issues. Still, the utility opposes the emissions cap bill unless it is amended to ensure there's a market-based approach. In addition, PG&E and other companies that have already voluntarily cut their emissions of greenhouse gases, want to ensure they get credit for that.

Proponents of the measures say California must lead the way in the face of the federal government's inaction on mandatory reductions of greenhouse gases.

Assembly Bill 32, the "Global Warming Solutions Act of 2006," is sponsored by Assembly Speaker Fabian Nunez, D-Los Angeles, and Assemblymember Fran Pavley, D-Santa Monica. It matches the goal Schwarzenegger set in an executive order last year of reaching 1990 emission levels by 2020.

The governor is pushing for significant changes to Nunez's bill, which was approved by the Assembly and is now in the state Senate. Schwarzenegger wants an explicit commitment to a market for emission allowances. Also needed is "an economic safety valve" to make sure the plan doesn't hurt the state's economy, said Linda Adams, the governor's Secretary for Environmental Protection.

The bill has only loose commitments to these ideas, but the outlook for a compromise is positive.

"AB 32 could be an important tool in meeting the governor's aggressive greenhouse gas targets," said Schwarzenegger spokesman Bill Maile. "The administration is working closely with Speaker Nunez, Assemblymember Pavley and other key stakeholders to make sure the governor gets a bill he can sign into law."

Opponents See High Costs

The governor's office hasn't taken a public position on the other bill, which would prohibit new long-term contracts for power from plants that pollute more than a new, natural gas-fired plant. That bill mostly puts into law administration policies that are currently being implemented by regulatory agencies.

Both bills are opposed by some business groups. The California Manufacturers and Technology Association says that such a drastic cap on emissions would drive businesses and jobs from California to other states or countries. As a result, greenhouse gases may not be reduced much globally, said Joseph Lyons, CMTA's policy director for Energy.

The cap on emissions, "is going to be devastating, especially for oil refineries, the cement industry and electric power generation," said Lyons. "It's going to increase energy costs in California."

The CMTA is also opposed to the prohibition on utilities signing long-term supply contracts for power from older, dirtier power plants. Even coal-fired plants with cutting-edge technology won't be able to meet that standard, said Lyons. He added that the restriction would lead to higher electric bills.

PG&E, Schwarzenegger and others say new technologies would sufficiently clean up coal-fired plants to meet the standard.

The California Chamber of Commerce opposes the bills and has formed a coalition with some farm and other groups to assess what the 1990 emission cap would cost the California economy.

Supporters of the laws argue that the state's economy will benefit by putting California at the forefront of combating climate change. The state's technology companies, according to environmental groups and several Silicon Valley companies, will develop products that will be sold around the world to reduce emissions.

Good Faith Talks

The state's Democratic leadership and the governor are negotiating in good faith, rather than using the issue as a campaign weapon, people in the legislature, the governor's administration and industry said.

"My impression is that all the parties are open to a dialogue," said PG&E's Pulling, echoing the comments of others interviewed. "We're working with both the governor's office and the speaker's office."

If the laws are enacted, proponents hope that other states will follow California's lead. "A whole lot of other states will start following suit," said Marston.

To make it to the governor's desk, the bills must be voted out of committee and passed by both houses by August 31. The governor has until the first week of October to sign or veto bills passed by the Legislature.

-By Mark Golden, Dow Jones Newswires; 415-765-6118; Mark.Golden@dowjones.com

(END) Dow Jones Newswires

July 13, 2006 15:20 ET (19:20 GMT)

Copyright (c) 2006 Dow Jones & Company, Inc.