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Hope, Skepticism at Renewables Conference

One section of a solar-thermal array on display at UC Riverside. Thousands of these mirrors gather solar radiation to heat a synthetic oil, which drives electrical generation at huge desert facilities. Photo: Craig Miller

One section of a solar-thermal array on display at UC Riverside. Thousands of these mirrors gather solar radiation to heat a synthetic oil, which drives electrical generation at huge desert facilities. Photo: Craig Miller

Perhaps the most telling moment at the Governor’s Renewable Energy Policy Conference this week, was when the Governor’s own senior advisor on renewables, Michael Picker, asked for a show of hands. How many present, he wondered, actually thought that California would attain its goal of 33% renewable power by 2020. Amid the 370 or so gathered on the campus of UC Riverside, about a dozen hands went up. How many, he asked, thought we’d make it to 33% by 2050? Another dozen or so hands.

Bear in mind that this was a room containing some of the most knowledgeable people on the topic, from government, industry and environmental organizations. These were people invested in getting there, yet most seemed to doubt that we would.

Their pessimism was not entirely shared by the questioner. Picker told me afterward that he expected about 8,000 megawatts of new power to be approved by year-end. That’s approved, not necessarily financed. Solar arrays that generate 250 MW or more are considered large-scale operations.

Meanwhile, developers are pushing to get major projects approved before the year is out. To qualify for federal stimulus dollars, projects have to break ground this year and spend a certain percentage of project costs.

“It’s a hard state to develop in,” said Matt Handel, a vice president with NextEra Energy Resources. The Florida-based company is already a major player in both solar and wind generation in California, and Handel says the stimulus money is essential for two major new projects that NextEra has in mind for the southern California deserts.

“There is hope,” Handel told me. “It is difficult. There are a lot of constituencies out there pulling in different directions.”

Virtually all of those stakeholder groups were present in Riverside, in some form. Local (especially desert) communities, environmentalists, Indian tribes and representatives from federal agencies such as the Bureau of Land Management and National Park Service were there.

Identifying the most appropriate sites for large-scale wind and solar plants has been complicated by more than bureaucracy, said Kim Delfino, California Program Director for Defenders of Wildlife. “The landscape we’re working in is already changing due to the effects of climate change, which presents a challenge as to which areas to protect,” said Delfino in a panel discussion.

Picker says he’s “not so sure” that the state is doing the best possible job of moving projects efficiently through the pipeline (to borrow a metaphor from the fossil fuels era), and he conceded that some developers will be left standing in line as the year-end deadline expires. But he calculated that if, over the next five years, 20% of the biggest projects on the drawing board can get approved, the state should make its 2020 goal.

AB 32 and the Economic Road Ahead

87712532By 2020, California will see two million new jobs whether the state implements its climate law AB 32 or not, according to a revised analysis from the California Air Resources Board.

The report, released Wednesday, predicts modest growth in the state economy over the next 10 years, including growth of 2.4% in both personal income and gross state product with or without the law.

During a Wednesday conference call,  CARB chairman Mary Nichols told reporters that sectors where California is strong, such as renewable energy and informational technology, will benefit from AB 32.

“California is uniquely positioned to benefit because this is the direction in which our economy is going anyway,” she said.

Nichols added that industries heavily dependent on petroleum will also benefit, but that they will have to go through a transition.

“We will see economic benefits overall by 2020,” said Nichols, “but it will be easier for some than for others.”

The report was reviewed by the 16-member Economic and Allocation Advisory Committee (EAAC), an independent panel of policy, business and economic experts appointed by Nichols and California Environmental Protection Agency Secretary Linda Adams.

The report finds that AB 32 provides, “neither a huge boost nor a major negative impact on California,” said Larry Goulder, chair of the EAAC and of Stanford’s Economics Department on a call Wednesday with reporters.  “These findings are not that different from other studies that have been done.”

The Air Board’s original analysis was questioned earlier this month in a report from the non-partisan Legislative Analyst’s Office, which projected a mixed bag of pluses and minuses, with a short-term negative impact on jobs.

CARB’s first economic projections were criticized by others, including UCLA economics professor Matthew Kahn.   Kahn said he is much happier with this new report because of adjustments made to the baseline scenario and because of the independent review made by EAAC panel, which he called a “dream team” of economists.  However, the report still falls short, Kahn says, because its macroeconomic approach doesn’t identify how specific industries and businesses will fare under AB32.

“The report released today is about averages. And where I think we need more research is in how individual firms will be affected,” said Kahn. “When I was in graduate school, I had a professor who used to say ‘if your feet are in the fridge and your head is in the oven, on average, you’re ok’ and I always thought that was a funny joke, but I think it’s apropos about California today.”

Also on Wednesday, Kahn published an opinion piece in the LA Times with co-author James L. Sweeney, director of Stanford’s Precourt Energy Efficiency Center, arguing that a study frequently cited by opponents of AB 32 is seriously flawed.  The study, known as the Varshney/Tootelian analysis, estimates that the law will cost small businesses $50,000 a year and each household $3,857 a year once the new rules kick in.

Opponents of AB 32 are advocating for a ballot initiative that would suspend the law’s regulations until the state economy improves and the state unemployment rate drops to 5.5%. It’s currently pegged at 12.5%, officially.