Two Upbeat Reports Stir Black Memories of the California Energy Crisis

Next 10, a technology think tank, says California's public policy and green grass roots have made the state more energy efficient, emitting less greenhouse gas per person, than the rest of the United States (by half). California beats even Germany, the UK, and Japan.

Next 10 and partners created a series of indicators which they will track annually to measure progress in achieving the state's ambitious greenhouse gas reduction goals in AB-32. The law requires a reduction of such emissions to 1990 levels by 2020.

Since 1990, per capita carbon emissions in the state have declined 18 percent while wealth (GDP) has grown 20 percent, a dramatic slap down for those who say using less energy means doing without.

Most of these savings flow from utility efficiency programs, encouraged by regulatory policies which "decoupled" the profits of investor-owned utilities from the amount of power sold. Another big slice comes from the state's Title 20 and 24 appliance building efficiency standards and other programs.

These programs "have yielded tens of billions of dollars in savings and reduced the need for twenty-four 500-MW power plants between 1975 and 2003," the report said. It was this latter statement which stirred some dark memories.

Just a few years ago California was in the midst of an energy earthquake that bankrupted two of the nation's largest electric utilities and turned a governor out of office in a stunning recall that made Arnold Schwarzenegger leader of the state and a national political figure. The California energy crisis started with a poorly designed plan for deregulating the electric power industry and was made catastrophic by market manipulations of companies like the departed Enron and the lack of regulatory action by the Bush Administration.

It was in the midst of this turmoil and rolling blackouts that the public policy and the environmental ethic now celebrated were called into question. Vice President Cheney made speeches declaring that the answer was more power plants, maybe as many as one a week for the next 20 years. And he made it clear that California had only its misguided greenness to blame for its predicament.

The Green Innovation Index documents a different view of the past. But it shows a decreasing portion of CO2 emission reductions will come from the programs currently in place and by 2020 almost all of the CO2 reductions will come from technological innovations. Thus, a key indicator will be venture capital attracted by California's greentech companies. The figure was $884 million in 2006, more than double the year before. Much of this originates within the state from both private and public sources. California's two giant public pension funds invested about $400 million in 2006, double the previous year.

The index will also track greentech patents as one indicator of the payoff of the investment in innovation. The current picture looks good for California but not for the rest of the nation. California captured more of the greentech patents than any other state in 2006, for example, 44% of solar and 37% of wind. But since 1998, foreigners have been winning more patents in the field than American inventors - about 800 vs. 600 in 2006.

California's success was validated in a blue ribbon report which was just published by McKinsey & Co. and the Conference Board, the influential consulting firm and the think tank of our biggest businesses.

The McKinsey report (PDF) says the U.S. could reduce greenhouse gas emissions in 2030 by up to 46% from projected levels and 28% below current levels at less than $50 per ton. Those reductions would not lower the country's standard of living. In fact, almost 40% of the reduction would save money - a potential rise in living standards.

McKinsey looked at 250 demonstrated opportunities to reduce carbon emissions and concluded that 35% of the potential reduction would come from more efficient and cleaner electric power, 20% from more efficient buildings and appliances, 17% from industry, 15% from more efficient vehicles and lower carbon fuels, and 13% from expanded carbon sinks in forests and agriculture.

The evidence is growing that the U.S. has a consensus about both the necessity of drastic reductions in greenhouse emissions and the economic benefit of doing it.

Mark Braly was energy advisor to the mayor of Los Angeles during the 70s energy shock, author of the city's prize-winning energy plan, and president of a State of California non-profit corporation which made loans to renewable energy businesses. Now retired, he is a City of Davis, California, planning commissioner working on the city's zero-carbon program.