The Dirty Road Not Taken

Rolling Stone recently reported on how California's leadership on energy policy may set the course for national policy under the Obama administration.  There is good reason to believe that the administration is already taking real steps in that direction.  My colleagues have discussed a number of the most exciting steps, including directing the EPA to reconsider California's request for a waiver to regulate global warming pollution from cars, and telling the DOE to get moving setting appliance efficiency standards, long a central pillar of California's energy policy.  The new stimulus bill also includes funding for efficiency and public transit- great ways to get our economy moving again- and transform it into a more green economy in the long run.  A number of my colleagues have blogged about the crown jewel of California policy: the Global Warming Solutions Act, which caps California's emissions and requires economy-wide reductions in the pollutants that cause global warming.  We are all hoping that the federal government can also pass an economy cap and trade, but I will leave that for a later post.

Today, I am writing my first blog because I want to note another aspect of California's policy mentioned in the Rolling Stone Article: The Emissions Performance Standard (EPS).  Passed in 2006 in Senate Bill 1368, the EPS prohibits new long term investments in any power plant that emits more global warming pollution than a combined-cycle natural gas plant.  What this means is that electric utilities in California can not invest in new dirty coal-fired power plants, or make long term investments in the ones they own now, unless those plants utilize technology that limits their carbon emissions.   

What makes the EPS such a good tool is that it is a technology neutral way to prevent investments in the most carbon-intensive energy sources. While the effect in California was to halt consideration of traditional dirty-coal plants, it doesn't ban coal outright. Instead, it allows investment electric generation of any sort, so long as it doesn't emit more carbon than the standard allows.  The standard is set low enough to prevent traditional coal plants, and high enough to allow cleaner gas plants (important for grid stability for the moment, even as we ramp up renewables.)  If power companies decide that coal is still a better investment, they are free to use it, so long as they limit emissions- leaving room for carbon capture and sequestration technology.

California is already less dependent on coal than much of the nation, but the EPS guaranteed that the no new dirty coal plants will be built until the California Global Warming Solutions Act (AB 32) comes in to full effect, in 2012.  Now that Congress is following California's lead and considering climate legislation this year, the EPS would be a useful federal tool to off investments in dirty power sources until a more comprehensive program can be put into place.  I hope President Obama takes a look at it. He certainly has enough Californians around to let him in on the secret.