Jerry Brown's tough choice: green energy in hard economic times

With Jerry Brown now governor, California lawmakers are resurrecting an idea vetoed by Arnold Schwarzenegger: Make utilities buy at least 33 percent of electricity from renewable sources.

Instability in the Middle East has put America’s dependence on foreign oil back on front pages. It’s also added another ball to California Gov. Jerry Brown’s juggling act over this state’s renewable energy sector in tough economic times.

Democrats are resurrecting an idea vetoed by former Gov. Arnold Schwarzenegger that would require utilities to buy at least 33 percent of state electricity from renewable sources by 2020, hoping Mr. Brown will be more amenable. On Thursday, the bill passed in the state Senate.

“All indications by those commenting on this in committee is that this is an idea whose time has finally come,” says state Sen. Joe Simitian, the bill’s author. “This last month in the Arab world has been a stark reminder of what happens when Americans are driven by energy needs rather than our values and principles.”

Leading environmental groups are applauding the action.

“Senator Simitian’s bill has remarkable bipartisan support and would boost confidence in clean energy investments, create jobs, and enable California to meet its pollution reduction goals,” says Peter Miller, senior scientist with the Natural Resources Defense Council. “Voters made it clear last November that they want to move forward with a clean energy future. Now we must implement the wish of the voters.”

Brown campaigned strongly on environmental themes, but others are asking how green he can afford to be given the state's current fiscal straits.

Lawmakers already are at loggerheads over how to close the $26.4 billion budget deficit. If Brown is serious about balancing the budget – which he stated vociferously in both his inaugural address and his first state-of-the-state speech – how pioneering and innovative can he afford to be if big, costly programs are impossible?

How 'green' can Jerry Brown go?

“There are real limitations on how green Jerry Brown can go,” says Ross DeVol, executive director of economic research at the Milken Institute. “Brown clearly supports the green industry effort and wants California to be a leader, but his top priority is the budget problem he has to deal with.” Mr. DeVol says it’s questionable whether the state is on track to meet the guidelines even for this year.

But he says consumers and residents clearly back the idea as evidenced by their defeat of Proposition 23 in November. Prop. 23 would have suspended the state’s Global Warming Act of 2006, which mandates reduced carbon output by 2020 until state unemployment sunk below 5.5 percent. (It’s now at 12.5 percent.)

Either way, California is definitely in the spotlight, experts say.

“Absolutely, California has been the world leader in this area for many years," says Nabil Nasr, director of the Golisano Institute for Sustainability at Rochester Institute of Technology in New York. “Not only in the US but overseas as well, leaders in the field of renewable energy are keeping their eyes on the state to see what they can learn.”

When the state Assembly takes up the bill, resistance is expected from the manufacturing sector, which is not particularly wild about moves to embrace clean technology industry in the current economic climate.

Jobs versus the environment

“Our state should focus on creating permanent green jobs, rather than short-term jobs that survive only with government subsidies and damage the state's larger economy,” says Jack Stewart, president of the California Manufacturers & Technology Association. “The real solution to solving California's economic woes is to restore a healthy business climate by cutting job-killer regulations and allowing the demand for green products to be translated into jobs in California rather than jobs in Texas and China.”

Some key Republicans in the state are against the idea for similar reasons.

“At one time – not too many years ago – California was known as the center of innovation, technology, and original thinking. Today, as businesses close their doors and escape to more friendly environments, other states in the nation use California as the example of what they do not wish to become,” says Republican state Sen. Mimi Walters. “If our government truly sought to achieve the purported environmental goals … it would seek to promote an economy driven by innovation through private industry rather than by onerous regulations promulgated by government agencies.”

One problem is the possibility of higher costs.

“It's a noble effort for a good cause, but it will result in higher energy costs,” says Peter Zaleski, an economics professor at The Villanova University School of Business. “Why? Because green energy currently costs more to produce. In addition, such a requirement provides no incentive to green energy producers to develop innovations that would lower the cost of producing green energy. So it hurts in the long run as well.”

Still, says Wade Crowfoot, West Coast Regional Director of the Environmental Defense Fund, “This is a gigantic step forward for renewable energy and the California economy.”