California GHG law may drive away power plants, refiners: Sponsor

Washington (Platts)--6Dec2006


California's new global-warming law could prompt electricity generators,
petroleum refiners and other industries to leave the state for more
pollution-friendly climes unless a host of other states or the federal
government adopt similarly aggressive climate-change measures, the chief
sponsor of the law said Wednesday.

Fabian Nunez, the Speaker of the California General Assembly, told a
Washington briefing that "the only way" the law would not spur certain
industries to leave the state was for "the rest of the country to do something
similar" on global warming.

"If nothing else happens on the national level, I'm not going to say that
[California's global-warming law] will have a total soft landing for all
industries," Nunez said. "It would be very easy for the cement industry [among
other sectors] to pick up and relocate."

Nunez' comments acknowledged the fears that many energy companies and
Washington policymakers have voiced regarding the law: that it will raise
energy prices and hurt the economy.

The law, which California Governor Arnold Schwarzenegger signed in
September, requires electricity generators, oil refiners and other industries
to reduce their greenhouse gas emissions to 1990 levels by 2020, a cut of
about 25% compared with projected business-as-usual levels.

But when pressed to justify how he could support a law that may hurt his
state's economy, Nunez changed tack and said the measure would not drive
industries away.

"Businesses plan long-term," he said. "If this bill was as bad for
business as [critics] have articulated...you would see businesses leaving
California by now."

Nunez also said the law's emissions caps would be gradually phased in
over a 14-year period, which he said would give businesses ample time to
improve energy efficiency and to invest in alternative technologies.

"Already we're seeing billions of dollars in investment," he said, adding
that a University of California study said that the law would lead to the
creation of 14,000 new jobs in the area of "green building" technologies in
the next 10 years.

Nunez said he was scheduled to discuss global warming Wednesday with two
high-profile Democrat lawmakers. He is to meet with Representative Nancy
Pelosi, the incoming Speaker of the House, and Senator Barbara Boxer, the
incoming chair of the Senate Environment and Public Works Committee.

--Brian Hansen, brian_hansen@platts.com

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