California’s Bold Approach to Reducing Global Warming

California has long been know as a trend setting state, as it should be, with one out of every eight Americans calling it home. And under the leadership of Governor Arnold Schwarzenegger, the trend is focused on slowing down global warming before it’s too late.

The Global Warming Solutions Act of 2006 was signed into law by Governor Schwarzenegger in an attempt to comply with the provisions of the Kyoto Protocol. It scripts a timetable to bring the State of California into compliance.

This environmental law is bold legislation. It requires the major industrial producers of greenhouse gas emissions to reduce their emissions by 25 percent by the year 2020. That means a dramatic decrease in the release of carbon dioxide, the number one contributor to global warming.

The approach taken to achieve that goal is by means of “cap-and-trade.” Companies are given a specific greenhouse gas emission target. Companies that run clean can sell their credits to companies that are large producers of greenhouse gas emissions. In this way, companies with low emissions are rewarded through the sale of their credits. Because this is a market based system, it allows free markets the ability to determine the best solutions instead of waiting for the government to guess at what innovations they think will prove to be successful. Even Bob Epstein, one of the Silicon Valley’s most prominent entrepreneurs supports the new law.

Besides the environmental impact, there are huge economic benefits as well. The task of reducing global warming in California would increase income by more than $4 billion and provide 83,000 new jobs. This growth stems from high quality jobs in innovative green technologies. The law also allows companies to increase their purchasing power once they have decreased their import of fossil fuels and reduced energy costs.

Some fear the environmental law will cause businesses to leave the State of California. That doesn’t seem plausible though, since all suppliers that sell to California are affected, not just those based in California.

I say kudos to Governor Schwarzenegger and the State of California for finding a way to mesh economic growth with global benefits.