March 17th, 2010 by Michel Gelobter

The last few weeks, I’ve covered a range of federal actions that are driving energy and carbon onto the business agenda. For all that action though, the real action is in the states, starting with California.

I had the privilege in 2002, of helping California legislators craft what has become the world’s most aggressive climate change law, the California Global Warming Solutions Act. The law is aggressive because it essentially mandates compliance, by all of California, with the Kyoto Protocol. This means reducing emissions back to 1990 levels by 2020 (a more than 15% decrease from emissions levels today and a 30% decrease from what emissions were expected to be absent the law). Although the law gives the state significant time, it also mandates reductions of up to 80% of 1990 emissions by 2050.

Reporting under the law has already started for sources larger than 25,000 tons and anyone in the state generating more than 1 MW of electricity. The regs here, like EPA’s, embody a whole host of calculation methodologies for power generation, refineries, cement plants, biomass conversion, and fuel use. If you have to report, you usually know who you are, but watch that pretty low power threshold. A lot of co-generation facilities are being subsumed under this rule.

The law’s major provisions kick in in just 2 years (2012). They are sweeping and involve:

· Substantially stepping up building and appliance efficiency standards;

· Getting the overall mix of energy up to 33 percent renewables;

· Developing a state-level cap-and-trade system;

· Controlling transportation related emissions, including a Low Carbon Fuel Standard; and

· Creating lasting revenue streams from fees for water use and other systemically large sources of greenhouse gas (pumping water accounts for 20% of California’s electricity use!)

All told, these measures represent a set of near-term changes and opportunities for business-as-usual in almost every sector. And the nature of the California law means that the changes will keep rolling out for the foreseeable future.

And did I mention that over a dozen Northeastern states are trying to opt-in to essentially just follow suit and adopt California’s program?