Energy Interests Spending Big to Stop California Emissions Law

By · September 18, 2010

Prop 23 Rally height="443" />

Proposition 23 supporters rallied outside of a Sacramento Valero station in March.

In 2012, a California law aiming to reduce greenhouse gas emissions in the state by roughly 25 percent over the next decade, is scheduled to go into effect. The Global Warming Solutions Act of 2006 (or AB 32,) will give the California Air Resources Board sweeping new powers to set emissions limits and reduction measures—and set the stage for the creation of a regional cap and trade system called the Western Climate Initiative.

But a powerful group of business interests including two billionaire brothers who recently came into the public eye for their role in financing the Tea Party, are hoping to head off AB 32 with a ballot measure called Proposition 23, or "the California Jobs Initiative." Charles and David Koch, whose Koch Industries has an annual revenue approaching $100 billion—and has several times been ranked among the country's top air polluters—have donated $1 million to groups organizing for the law.

The campaign, which emanates from a series of political action committees, reportedly has received 98 percent of its funding from a group of oil companies led by Valero Energy Corp. and the Tesoro Corporation—with 89 percent of that money coming from out-of-state. (Koch Industries is based in Wichita, Kans.)

Big Money Resting on National Implications

So why is Proposition 23 so popular with out-of-state energy companies? In a letter sent to more than 400 members of the National Petroleum Refiners Association, the group's president Charles Drevna called the the measure "the difference between life and death for our industry in this century." Drevna went on to write that the new regulations could one day spell the end for gasoline-powered transportation, saying "You simply can’t achieve these drastic reductions in carbon and still refine petroleum for use as a motor fuel."

But the real danger for the oil industry isn't AB 32 itself but its potential to set the stage for similar regulations in other states—and its implications for a proposed federal cap and trade bill. In their campaign to overturn AB 32, opponents see a chance to send a message to lawmakers all over the country that even in one of the nation's greenest states, voters do not support carbon-cutting legislation.

California Tea Party height="414" />

Tea Partiers in California haven't yet rallied around Proposition 23 the way they did on issues like health care reform.

If That's Grass, Then Where Are the Roots?

Despite its financial and ideological ties to the surging Tea Party movement—which boasts more than 200 local chapters in California alone—there is little evidence to suggest that the Prop 23 campaign has been successful so far in organizing the group's members around the issue. Yes on 23 has staged two rallies, with the most recent taking place outside the California Republican Convention in San Diego—but neither attracted more than a handful of participants, and the issue hasn't been central to larger Tea Party gatherings around the state.

Moderate Republican gubernatorial candidate Meg Whitman has refused to take a firm stand on Prop 23, but has said that she is personally leaning towards voting against it. Whitman has never enjoyed much support from Tea Partiers, but she's counting on high turnout from motivated conservatives in and outside of the movement to help boost her to victory in November.

Whitman's refusal to appease those voters on Prop 23 speaks to the reality that Yes on 23 is hoping to use its deep pockets to change: Conservatives in California just aren't as passionate about that issue as they are others, such as taxes and health care.

'Make it About Jobs'

Much of the $8.2 million that has been raised to pass Prop 23 will be spent on media buys aimed at convincing voters that the measure is primarily about jobs, not the environment. Opponents of AB 32 have long warned that the bill acts as a tax on businesses, and will discourage hiring around the state while leading to layoffs in the industries that are most affected. To highlight the alleged economic implications of the law, Proposition 23 was drafted specifically to prevent AB 32 from taking effect until California's unemployment rate drops to 5.5 percent for four consecutive quarters—something that has happened just three times in the last 40 years.

That economic argument is undercut somewhat by the fact that much of the business community in California opposes Prop 23, with the state's largest oil companies deciding to remain uninvolved in the campaign to pass it.

Still, as the election nears and voters begin to pay attention to the issues that will be on this year's ballots, polling indicates that enough voters are still undecided on the measure to potentially tip the scales in favor of its passage. Also working in the legislation's favor is expected high turnout from conservative Republicans like the Tea Partiers. Whether or not those voters will head to the polls thinking about Prop 23, many are likely to pay close attention to the endorsements of the larger organizations that make up the conservative movement—and those organizations are firmly behind the Koch brothers and Valero in their efforts to stop any and all climate legislation.

Comments

· Samie (not verified) · 4 years ago

Zach, thanks for another great article, posted here & hybridcars.com

Honestly, what is there to say?

Main message from Prop 23 is keep most hidden costs hidden, and in the hands of taxpayers not private businesses. Also, funny how people would vote yes to Prop 23 despite the fact that better air & water quality can actually increase life expectancy and quality of life.

However, what I will say is that utility companies and other major polluting industries need consistent and predictable emission standards. Billions of dollars are spent on compliance to federal and state emission laws each year so there needs to be better consistency across the U.S. (a rational argument for a nationwide Cap and Trade system????) Where folks like the Koch brothers come in is trying to keep their businesses on business-as-usual modeling/forecasting and trying to reduce and control abatement costs, as they see their costs now.

· · 4 years ago

Fantastic! Thanks for taking this one on. I'll be back to say something meaningful... but I'm glad this is here!

· Steven (not verified) · 4 years ago

Instead of lobbying directly against AB 32, companies like Tesoro and Valero should be lobbying for 'environmental equalization taxes' (i.e. tariffs) equal to the cost of compliance to insure they can remain competitive. This is, of course, true across the entire economy. Instead of allowing Wall Street and CEOs to cash out in a race to the bottom in wages and environmental devastation, in the interest of jobs for Tesoro and Valero employees and everyone else, we should insist upon minimum wage and enviromental standards for anyone who wants to sell products in California or anywhere else in the US.

· · 4 years ago

Instead of saying something meaningful as promised... I'll say this:

Why is it that non-scientists are the only ones who take it upon themselves to determine what is "Junk Science?" Or to put it another way, I guess "Junk Science" is any science that doesn't come to a desirable conclusion.

Sorry... just riffing off the new image at the top of the article. Thanks Valero! What would we do without you and your science-minded ralliers?

· · 3 years ago

"You simply can’t achieve these drastic reductions in carbon and still refine petroleum for use as a motor fuel." Straight from the horses mouth!

Darell: "Why is it that non-scientists are the only ones who take it upon themselves to determine what is "Junk Science?"

I guess it's the same reason why people that have never driven an EV will tell you how debilitating range anxiety is.

· · 3 years ago

Here's my sign in retort to the guy in the picture at the start:

"Don't let Big Oil and corporate interests determine the health of your lungs -- or destroy the health of the planet."

Even if electricity, etc. comes to replace oil as the primary fuel for our auto and light-truck transportation fleet, the need for oil won't disappear. In fact, global oil supplies -- which will continue to be used for production of synthetics, and, realistically, for things like air travel (I did read Boeing is looking into a hybrid jet plane) -- will last longer, much longer if autos stop sucking down 70% of our supply.

With autos/light trucks running on something else, that will alleviate some of the pressure on the airline industry to immediately reduce its CO2 output. Not to mention, it'll keep air travel costs from skyrocketing out of reach for the average person. As far as I know, there is no realistic replacement for oil for global jet travel on the horizon.

Of course, apparently the Big Oil folks think drying up our oil supply as quickly as possible is best for them and their profits, hence the quote about refined petroleum and motor fuel. But i gotta wonder -- is sucking down the world's oil as fast as possible really good for Big Oil in the long term? What happens to Big Oil when -- golly gee -- there is NO MORE OIL? (oops, forgot: corporate folks don't think truly long term)

· · 3 years ago

Christof -

My take on you question: We never really run out of oil. It just gets more expensive to extract. The real problem isn't the end of oil... it is the question of what amount are people willing to pay for it. The fewer energy options we have, the more people are willing to pay for the oil we "need".

And as in most things, the consideration of "long term" takes a back seat to profits in hand today.

· Samie (not verified) · 3 years ago

Todays oil company will at some point diversify most of their business into other alternative energies, mostly through acquisitions. So don't be surprised when it happens.

darelldd you are exactly right about never running out of oil. Alternative choices will prolong petroleum along with more expensive methods of extraction like shell oil. Predicting petro prices through market activity based on peek oil or near exhaustion of oil is tricky and not so clear cut. This is because of short-term business thinking and poor energy planning among industrialized nations. But at some point, alternative choices will emerge by price and efficiency forming substitutions.

Long-term it will be so expensive to extract petroleum that it will be better left in the ground. Ok its more complicated than what I said but the point is to use government and markets to manage petroleum uses along with real transitions away from inelastic energies & non-renewable sources. If we only focus on short-term profits and policy we no doubt will be in for some serious problems including a global economic crash leading to prolonged recessions and widespread humanitarian problems.

· Anonymous (not verified) · 3 years ago

Nothing like a pithy, opinionated writer to ruin what should be a straightforward matter of fact article. A little less editorializing (and do try to mask your hate for the Powers that Be) and a lot more FACT would be useful.

· · 3 years ago

@anonymous: Hello: Zach's is clearly an analysis article. BTW, there's a lot of pithiness and sarcasm in your comment -- and I don't see any facts either...

· · 3 years ago

Anonymous - As the editor of this site, I invite you to help our growing community better understand important issues, such as Prop 23. If facts are missing or misstated--as you assert--please fill in the gaps with at least a brief outline of what the public should know.

To me, one fact comes through loud and clear: Oil companies have used and will continue to use their considerable resources to protect their interests by undermining legislation which is good for the environment, our economy, and public health. As it relates to this website, I see Prop 23 as an effort to forestall the transition to using electricity as a transportation fuel--and move us off oil.

As a California voter, I would like to see your facts in support of Prop 23, I'm open to any genuinely persuasive argument to vote for the proposition to kill AB32, which I currently view as one of the most important pieces of environmental legislation in a generation. Again, we welcome your participation in a spirited dialog on PluginCars.com. Thanks.

· · 3 years ago

I think what conservatives need to know, first and foremost, is that the implementation of AB 32 is unlikely to have a significantly adverse effect on California's economy. Prop. 23 wouldn't stand a chance of passing if the oil companies weren't working so hard to connect it with jobs.

While I will be voting against 23, I will say that I am unsure about the efficacy of cap and trade systems from a practical standpoint. The proposed federal system just seemed to allow too much room for fudging, manipulation, and loopholes. While less popular, a straight-up carbon tax would probably be more effective in reducing emissions. But even there, the problem is the lack of a level playing field for US companies, which can (and do) simply choose to move production offshore rather than reducing emissions, or lose out to foreign competitors with fewer regulations. There is no perfect solution, and heavy-handed government involvement is likely to have unintended consequences.

· · 3 years ago

> Nothing like a pithy, opinionated writer to ruin what should be a straightforward matter of fact article. A little less editorializing (and do try to mask your hate for the Powers that Be) and a lot more FACT would be useful. <

Instead of calling the kettle black, why not bring more facts... er FACTS to the table? There are plenty of irrefutable facts in the article, of course And yes, Zach gives us his opinion. How did that ruin it? Facts by themselves often don't tell us the whole story, do they? I'm happy to hear your opinion on the subject as well.

If we don't challenge the powers that be... we just keep getting what we've got.

· · 3 years ago

Abasile,

I must say that I have/had similar concerns about the proposed federal cap and trade system. I do however have a lot more faith in CARB to set up a structure that wouldn't be as vulnerable to fudging and manipulation or have loopholes built in to favor whatever industries are favored by the 58th, 59th and 60th voters to come on board in the Senate. Of course, there's still the matter of keeping the playing field level for US companies...

I just really wish that the Prop 23 people were actually interested in approaching the issue from those angles. I spent hours looking for intelligent arguments in opposition to AB 32 that weren't based around faulty politicized studies or a general philosophical disagreements with "big government getting in the way of small business."

I've had plenty of intelligent discussions with Republicans in California---at least one of whom I know happens to support AB 32---about what the right course of action is to limit emissions and get off of oil. Unfortunately, it seems that most Prop 23 supporters (or at least the ones who advocate for the measure publicly) aren't the least bit interested in limitting emissions and in many cases don't "believe in" the science that says that they're harmful. That is for me, and I think at this point a growing majority of Americans, a non-starter.

I am by no means confident that the steps that have been proposed are the only solutions to this problem---or that they ultimately will even succeed. But as with other addictions, the first step to eliminating our carbon/oil additictions is admitting that we have a problem. At this point there just isn't any room at the table for the dealers and junkies who still enthusiastically proclaim that everything's fine.

· · 3 years ago

Every writer has opinions. Sometimes they write with the intent of being neutral, and sometimes they want the readers to know their position as Zach did here.

I like when an author expresses their opinion clearly in a forum like this where readers can respond with their own opinion. Neutral articles tend to not elicit as much conversation and discussion.

You disagree with Zach's take on this? Great! Let's here why. You have the floor and an audience. I for one would like to hear the facts that support why Zach is on the wrong side of this argument.

· Samie (not verified) · 3 years ago

Emotions like fear, hope, or change can make some rational voters irrational. In this day of cable news TV, unlimited campaign funding, and brainless talking points we as voters can get wrapped up in voting for things that go against our own self-interests without taking the time to think critically or independently for ourselves on important matters.

I agree with Zach and Abasile over uncertainty of a cap-and-trade system becoming too politicized. Real questions that must be asked is if permits are given-away or auctioned off, what level of "cap" do you set, or say can a permit holder bank the permit for future use.

Another point Abasile brings up is how to keep industries from exporting their abatement costs? At some point as more nations move to cap-and-trade systems &/or CO2 taxes there will be a need for an independent international accounting agency to make sure importers/exporters uphold emission agreements. Until then, any system will not be perfect but there are many examples to examine and learn from, including in Europe & the NE U.S. cap & trade system.

· · 3 years ago

Thanks for the responses, Zach and Samie. I will be voting for the implementation of AB 32, which means a "no" vote on Prop. 23, because I still think it's better than doing nothing, and I'd like to encourage the growth of the "green" sector in California.

Not many years ago, I was skeptical as to "global warming", mainly because I was aware of the large number of variables involved in climate, and hadn't yet taken the time to study the evidence for myself. Admittedly, even though I generally tried to be environmentally conscious, I was also turned off by how politicized the climate change issue seemed to be. However, as in other areas of life, the actual truth of the matter is not swayed by our opinions.

Rather than dismissing those who have difficulty accepting climate change, I find it works better to present the many, other compelling reasons for the development and use of clean energy, which include:
- US energy independence
- Cleaner air (who in California can't relate to this?)
- Long term energy security (key to economic stability)
- Fewer oil spills!

· · 3 years ago

To abasile's last point, I present this nugget:

"So-called “global warming” is just a secret ploy by wacko tree-huggers to make America energy independent, clean our air and water, improve the fuel efficiency of our vehicles, kick-start 21st-century industries, and make our cities safer and more livable. Don’t let them get away with it!" -Chip Giller, Founder of Grist.org.

This really sums up my feelings on the matter. I stay completely away from the climate change debate these days. There are hundreds, if not thousands of valid, incontestable reasons to clean up our act without even talking about climate change. As an example, let's pretend that there is no such thing as "global warming." Great. So does anybody think we should still be polluting the air we breathe? Polluting the water we drink? Wasting the resources we'll need later for more important things? Sending billions of dollars out of our economy every day? Fighting for oil rights? I don't need to go on, do I?

· · 3 years ago

I agree that it's best to keep things focused on oil dependency and clean air and avoid getting bogged down in debates about climate science, but at the heart of this legislation is the belief that we need to reduce greenhouse gas emissions. If that's not really the goal, then a cap and trade system and emissions controls sure seem like a contrived way of going about reaching energy independence.

It isn't that I was suggesting that people who don't believe in global warming should be dismissed, but rather that reducing emissions and oil use has to be the starting out point for further action. Going by just about any poll you want to look at, the public is behind these things and it's the responsibility of the government and industry to go out there and make them happen.

Environmental nihilists like the Kochs (i.e. people who don't think that government has a role to play in getting us off of oil or cleaning up our air,) are trying to stand in the way of what should be universally recognized public policy goals. That's why at this point, I think any serious criticism of AB 32 should focus on why the law is a poor solution to the problems at hand—not whether those problems exist or whether they're important enough to warrant the government's attention.

· · 3 years ago

Zach - all good points, and I agree. I'm just sayin'. ;)

· · 3 years ago

Darell and Zach, good points. I like that quote, Darell.

All I would add is that, regardless of one's level of acceptance of climate science, reducing CO2 emissions actually seems like a pretty good (though not perfect) proxy for cutting back on the use of fossil fuels. So, without being too far off, I think they could have called the "Global Warming Solutions Act" something else, like the "Fossil Fuel Replacement Act". Not that they should have, but I would maintain (as I think everyone here agrees) that we want the base of support for clean energy in general, and EVs in particular, to be as broad as possible. Yes, the polls may indicate that a solid majority is on our side, but that should never be taken for granted.

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