OIL COMPANIES LINE UP TO REPEAL CALIFORNIA’S LANDMARK CLIMATE CHANGE LAW
The following story by Adam Nagourney was published September 16, 2010 in the New York Times.
LOS ANGELES — A ballot initiative to suspend a milestone California law curbing greenhouse gas emissions is drawing a wave of contributions from out-of-state oil companies, raising concerns among conservationists as it emerges as a test of public support for potentially costly environmental measures during tough economic times.
Charles and David Koch, the billionaires from Kansas who have played a prominent role in financing the Tea Party movement, donated $1 million to the campaign to suspend the Global Warming Solutions Act, which was passed four years ago, and signaled that they were prepared to invest more in the cause. With their contribution, proponents of the proposition have raised $8.2 million, with $7.9 million coming from energy companies, most of them out of state.
This latest embrace by the Koch brothers of a conservative cause jolted environmental leaders who are worried that a vote against the law in this state — with its long history of environmental activism — would amount to a powerful setback for emission control efforts in Washington and statehouses across the country.
“It would have big implications,” said George P. Shultz, the former secretary of state, who is a chairman of a campaign to defeat the ballot initiative. “That is one reason why these outside companies are pouring money in to try to derail the same thing. At the same time, the reverse is true: they put this fat in the fire and if we win, that also sends a message.”
Gene Karpinski, president of the League of Conservation Voters, who has been traveling California to rally support against the proposition, called it “by far the single most important ballot measure to date testing public support for continuing to move to a clean energy economy.”
The campaign against California’s greenhouse gas law comes as business groups have invested heavily across the country in trying to defeat members of Congress who voted for a cap-and-trade bill that also mandated emission reductions; the bill passed the House but failed in the Senate in the face of strong opposition from lawmakers in industrial states.
Traditionally, public support for environmental measures suffers during tough economic times. Here in California, backers of the initiative have seized on that anxiety — which is particularly acute in this state, with its 12.3 percent unemployment rate — in search of a victory.
“I believe the battle over cap and trade in America is taking place in California on Nov. 2 of this year,” said Dan Logue, a Republican assemblyman from north-central California who wrote the ballot initiative. He added: “What we’re saying is, this is not the time for political correctness. This is a time for putting America back to work; let the experiments happen later.”
The law in question, known as A.B. 32, mandates slashing carbon and other greenhouse emissions to 1990 levels by 2020, by forcing power companies and industries to cap their emissions and by slashing carbon in gasoline. Some oil industry leaders said it would force them to invest millions of dollars to comply, and asserted that it would force companies to cut jobs and raise the price of gas at the pumps.
Although the vast majority of the money being contributed to fight the law is coming from oil companies, the oil industry is clearly not united in opposition: some major California oil refineries, including Chevron, have notably stayed out of the battle so far.
The ballot initiative, known as Proposition 23, would suspend the law from going into effect as scheduled in 2012 until state unemployment falls to 5.5 percent or lower for at least four consecutive quarters. That has happened only three times over the last 40 years, state officials said; thus, the proposition could have the practical effect of killing the law.
“The company believes that implementing A.B. 32 will cause significant job losses and higher energy costs in California,” said Katie Stavinoha, a spokesman for Flint Hills Resources, the petroleum company in Wichita, Kan., owned by the Koch brothers. “What’s more, the company thinks it sets a bad precedent for other state and federal governments to do the same thing.”
That said, the issue hardly breaks cleanly along business lines, reflecting in part the diverse business environment in California, which has always had a strong research and development sector, powered by venture capitalists ready to finance cutting-edge technology. Many business groups have opposed the drive to suspend the greenhouse law, and the list of contributors backing the measure is notable for the absence of venture capitalists.
“There is a huge clean energy revolution going on: this is going to happen,” said Thomas F. Steyer, founder of Farallon Capital Management, a hedge fund in San Francisco, and a co-chairman with Mr. Shultz of the campaign to defeat the proposition. “If we’re not careful, it’s just not going to happen in the United States.”
Mr. Steyer has contributed $2.5 million to the effort to defeat the initiative and said he was prepared to contribute an additional $2.5 million.
Mr. Schultz said that since the passage of the law, “a whole industry is developing here, and I might say a lot of jobs are connected with it.”
“There’s been a virtual eruption of research and development activities of all kinds on alternate ways to produce and use energy,” he said.
In most years, this should not be a worrisome battleground for environmentalists. The greenhouse gas law enjoyed strong support from the public when it passed four years ago, according to polls. The roster of opponents to Proposition 23 includes Gov. Arnold Schwarzenegger, a Republican, who views the law as a defining accomplishment of his career here.
Early polling suggests that voters who know about the measure are evenly split.
Yet supporters said they were concerned that the proposition could slip through at a time when Democratic spirits are low. More significant is the question of how much more supporters of Prop 23 can raise to finance their campaign. Of the $8.2 million raised so far, $1 million came from the Koch firm, $4 million from the Valero Energy Corporation and $1.5 million from the Tesoro Corporation; both corporations are based in San Antonio.
“We have every reason to believe that they are going to put the money in to run a big television campaign in the most expensive media market in the country,” said Annie Notthoff, the California advocacy director for the Natural Resources Defense Council, an environmental group. “We certainly are expecting to have a fight on our hands.”
Supporters of the law, if nervous about the proposition, remain optimistic than they can beat it back at the polls in November, and hope that such an outcome would have the opposite effect nationally that opponents of the bill are seeking. “If the proposition loses, the lesson is going to be there’s no going back,” said Wesley P. Warren, director of programs for the Natural Resources Defense Council.