What's at stake for solar in California

15. October 2010 | Top News, Markets & Trends | By:  Jennifer Kho

Four years ago, California passed the most aggressive global warming bill in the United States, setting a goal of reducing carbon emissions by 25 percent to 1990 levels by 2020 and to 80 percent below 1990 levels by 2050. Now Proposition 23 wants to hack it.

Arnold Schwarzenegger has pointedly refused to endorse Prop 23.

The Governor of California is campaigning to defeat Proposition 23. Image: Nate Mandos

Assembly Bill 32, which is trickling down into a far-reaching set of policies throughout the state, including a carbon cap-and-trade program and the mandatory reporting of greenhouse-gas emissions for major emitters, is scheduled to spark reduction measures starting next year, with mandatory caps beginning in 2012.

So it's no wonder that a proposition to suspend the law, Proposition 23, proved to be a hot topic at the Solar Power International conference in California this week. Companies such as Sun Run, SunPower and First Solar have been actively campaigning against it. The proposition, which will go to the voters in the November election, would freeze AB 32 until California's unemployment rate drops to 5.5 percent or less for four consecutive quarters.

According to the most recent data available from the Bureau of Labor Statistics, the state had a 12.4 percent unemployment rate in August. In fact, California has only met the 5.5-percent-for-a-full-year mark three times in the last 35 years. "This law would destroy, not delay, this law and all the economic benefits that would come from it," David Foster, executive director of the BlueGreen Alliance, said at a "No on Prop 23" press teleconference Thursday.

Proponents of Prop 23 say that it would save more than one million jobs and prevent higher energy taxes, saving households $4,000 per year. Meanwhile, opponents, including solar advocates, say the proposition would end up cutting jobs that green industries would create as a result of AB 32. "Killing California's global-warming law would kill jobs," Foster said. In this economy, "it's the worst mistake we could make. America has a jobs crisis today and we need to go forward, not backward."

Several opponents spoke against the proposition at the teleconference, including Solar Energy Industries Association CEO Rhone Resch, who called its defeat "critical". Prop 23 would represent a very significant loss to the industry considering that AB 32 has the potential to result in up to 20 gigawatts of new solar installations by 2015, he added. "The effect would be devastating," Resch said.

In addition, Prop 23 could lead to the reversal of California regulators' September decision – based on AB 32 – to boost the state's renewable goal to 33 percent from 20 percent, said Nancy Pfund, a managing partner at DBL Investors, a venture-capital firm that has backed photovoltaic companies such as SolarCity, Solaria and Solexant.

It could also destroy many other rules being written to implement AB 32, such as those requiring cities and countries to enact policies to reduce their emissions, she said. AB 32 is "creating a way to keep score and create a measurable impact for these products and services," she said. "[Prop 23] would remove that so there's no way to keep score."

In a separate interview, Nancy Hartsoch, vice president for sales and marketing at concentration PV company SolFocus, explained that AB 32 could open up a big municipal market for solar as cities and other local governments work to lower their carbon emissions, she said. That's a tantalizing prospect, because municipalities could likely move much faster on solar projects than utilities and state agencies, she added, but Prop 23 would make it harder for municipalities to approve those solar projects. "We need to bury it," she said, adding that SolFocus has been active in campaigning against Prop 23. "It would stifle innovation."
 
By creating policy uncertainty, Prop 23 would also chill private investment in renewable energy and other green technologies, said Marty Lagod, vice chair of the Clean Energy Network and a partner at Firelake Capital, during the teleconference. Driven by the policies in place today, California cleantech venture investment grew by more than a third from 2005, the year before AB 32 was signed, to 2009, he said. Changing the rules – or even threatening to change them – will chase money away, he said. "Changing the game now is what kills investment," he said. "[Investors] want to go to a place with policy stability."

The fight at the ballot box in California could have implications beyond the state's borders, as well, because its policies often set trends for other U.S. states. As Pfund put it: "Unlike Las Vegas, what happens in California doesn't stay in California." No doubt clean-energy advocates around the country will be watching the Golden State closely on November 2.


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