California Passes Landmark Climate Plan, Adopts Cap-and-Trade

The California Air Resources Board has unanimously approved a sweeping plan for reducing the state’s greenhouse gas emissions to 1990 levels — an average cut of four tons of annual emissions per person — by 2020. Outlining rules for nearly every sector of California’s economy, the plan represents the country’s most comprehensive strategy for curbing climate change and fostering a low-carbon (read: cleantech) economy.

ARB chairman Mary Nichols, who looks like she’ll be passed over for a spot in President-elect Barack Obama’s incoming administration, called the plan “California’s prospectus for a more secure and sustainable economy.” She added that the scheme would encourage investment in energy efficiency and renewables while creating hundreds of thousands of green jobs in California.

Today’s vote came about as a result of the Global Warming Solutions Act of 2006, or AB 32, which set the 2020 emissions target and required the air resources board to develop a plan for meeting it. Since a draft of the plan first appeared on the board’s web site in October, it has been downloaded more than 250,000 times and staffers have received more than 43,000 comments. Here’s how the board explained the key elements in today’s release:

An important component of the plan is a cap-and-trade program covering 85 percent of the state’s emissions. This program will be developed in conjunction with the Western Climate Initiative, comprised of seven states and four Canadian provinces that have committed to cap their emissions and create a regional carbon market.

Additional key recommendations of the plan include strategies to enhance and expand proven cost-saving energy efficiency programs; implementation of California’s clean cars standards; increases in the amount of clean and renewable energy used to power the state; and, implementation of a low-carbon fuel standard that will make the fuels used in the state cleaner.

Other steps outlined in the plan include tightening regulation of emissions from trucks and ships docked in California ports — a move estimated to cost the trucking industry $5.5 billion. Not surprisingly, that doesn’t sit well with Driving Toward a Cleaner California, an advocacy group of truckers, farmers, and contractors. As the Los Angeles Business Journal reports, the group has denounced the plan as “the nation’s most stringent new emissions regulations that could also be the most costly and far-reaching rule that business has yet to face.”

Businesses from a variety of sectors — not just electric car startups hoping to fill those showrooms, but also wine and finance — and environmental watchdogs have largely registered support for the board’s plan.

How about Joe the Californian — what does it mean for him? The Associated Press explains:

Air regulators said the average Californian could see more fuel-efficient cars and plug-in hybrids on showroom floors; better public transportation; housing nearer to schools and businesses; and utility rebates to make their homes more energy-efficient.

Sounds pretty great, huh? Oh wait, there’s more (again from AP):

But there will also be costs: Cars could become more expensive, and Californians can expect higher electric rates as utilities increase their use of renewable energy. Homes built with energy-efficient materials could also prove more costly, as could gasoline reformulated to release less carbon dioxide.

…all of which means big opportunities for entrepreneurs and companies developing green cars and building materials, energy management systems, renewable energy, and on and on.