California’s Proposition 23 has failed at the polls, so now either the “second Industrial Revolution” may proceed or it’s the end of free enterprise as we know it, or we simply move on to the next front in the assault on California’s emerging carbon regulations.

(Photo: Craig Miller)

The $40 million fight over Prop 23 presented two opposing themes: (a) AB 32 will wreck the economy, or (b) AB 32 will save the economy. Both visions for California’s climate law were hyperbolic. It would be fascinating to be able to tap into some parallel universe where it did pass, just to see what would really happen. More than likely some middle ground would prevail, as it will now, in this Universe.

Funny thing is, when California lawmakers passed the Global Warming Solutions Act in 2006, it was never intended to be a jobs program. But by Election Day 2010, it had been transformed into one by the alchemy of campaign rhetoric. Think tanks such as Berkeley-based Next 10 rolled out studies to document how California’s environmental leadership had produced hundreds of thousands of jobs. Tech investors pointed to the impressive share of venture capital flowing into “clean tech.” Outgoing governor Arnold Schwarzenegger made AB 32 a tent pole of his legacy. In an October media call, Alan Salzman, CEO of the California-based VantagePoint Venture Partners said we’re on the cusp of “a second industrial revolution,” that California could well lead the way in clean tech, if it seized the moment.

And it worked. AB 32 will stand, for now, headed for full implementation in two years with all the trimmings, including a statewide, if not regional cap-and-trade program; an actual “price on carbon,” for the first time in the West.

But this was the battle, not the war. Carbon regulation is under attack far and wide. Climate legislation remains stalled in Washington (Ryan Lizza’s piece for The New Yorker is a must-read). In this morning’s press conference, President Obama seemed almost to bury prospects for a national cap-and-trade program. “Cap-and-trade was only a means to an end,” he told reporters. “I’ll be looking for other means to address this problem.”

In a few weeks, negotiators will gather in Cancun for another round of UN climate talks. Some believe this round will be the last of its kind, a final collapse of the UN “framework,” as it’s been known.

In California, the next battle may already be here, in form of Prop 26, which appears to have passed with a margin of about 53-47%. With its requirement of a two-thirds vote to impose “certain” government fees, it could pose a more permanent threat to the full implementation of environmental measures like AB 32. Those fees purportedly include “those that address adverse impacts on society or the environment, caused by the fee-payer’s business.” Sounds a lot like the permits that companies would have to buy, to balance their carbon emissions.

But Nichols, still feeling the afterglow from the Prop 23 defeat party, asserted in an email to Climate Watch this morning that:

“Prop 26 does not impair the scoping plan adopted in 2008 or any regulations developed under that plan. AB32 is on track, with renewed vigor thanks to the resounding defeat of Prop 23 by the voters.”

Nonetheless, regulators may want to gird for the next skirmish.