Craig Miller

Three-quarters of Californians believe climate change is a serious threat to the state’s economy. And a majority thinks we need to act now to reduce emissions, rather than wait until the economy improves. These are among the findings of a new survey by the Public Policy Institute of California

“Californians really believe that in our state there’s an opportunity to have a better environment and a better economy through addressing climate change,” concludes Mark Baldassare, who directed the survey and says Californians believe — by a two-to-one margin — that climate change policies, like requiring more renewable energy, will create jobs.

The survey also finds overwhelming bipartisan support for requirements mandating more fuel efficient cars (81%), “greener” buildings and appliances (74%), requiring utilities to increase renewable energy sources (82%), and for requiring industry to reduce emissions (82%).

Opinion is sharply divided, however, over how to get those emissions reductions from the largest polluters.

Baldassare says just over half of Californians support cap-and-trade, one of the state’s main strategies for reducing emissions.

“Cap-and-trade is a very confusing policy to most Californians. They are still trying to grasp what it’s all about,” he said.

In effect, California’s initial cap and trade plans limit how much power plants and refineries can pollute as a whole, but allows individual facilities the flexibility to buy and sell emissions credits.  According to the study, slightly more Californians favor a straight carbon tax on emitters, which is not currently part of the state’s plans.

“The notion of a carbon tax, particularly a tax on companies, is easier for people to comprehend, and it’s  something they’ve been more supportive of over time,” said Baldassare.  “As people learn more about how a tax would work, and how cap and trade will work, opinions may shift, but government officials both at state and federal level continue to have a challenge in explaining cap and trade.”

Californians are less divided on the issue of nuclear power.  In the wake of the recent earthquake, tsunami, nuclear-meltdown disaster in Japan, support for new nuclear power plants in the state is down 14% from last year, with less than a third of Californians in favor.

Baldassare said that while support for renewable energy is usually pretty high in the state, favor for nuclear power – and offshore drilling — tends to fluctuate.

“We see a shift that’s possible based on news events and economic events with offshore oil drilling and with nuclear power that are a function of what the daily concerns that people are reading about in newspapers and what are their daily concerns when they go to the gas pump,” he said.

Along those lines, a year after the BP oil disaster in the Gulf of Mexico, the survey finds support for oil drilling off the California coast up 12 percent from last year, with likely voters split down the middle on the issue.

Other significant findings from the survey:

• 61% say the effects of global warming have already begun
• While 58% of Californians say the state government should take action to reduce greenhouse gas emissions right away, there’s a split along part lines.  67% of Democrats favor immediate action, while 60% of Republicans say the state should wait until the economy improves.
• 77% support California’s policy that one-third of the state’s electricity come from renewable sources by 2020, unless it results in higher electricity bills.  In that case, support is just 46%
• 27% say air pollution is the most important environmental issue facing California today

As governments try to figure out the best way to get carbon polluters to invest in and produce cleaner energy, two scenarios continue to come forward: cap and trade vs. carbon tax.

A new study from UC Merced and the University of New South Wales in Australia suggests that a free and uninhibited cap-and-trade system is the best way to go. The authors argue such a system will “trigger adoption of clean technologies at a considerably lower level of carbon prices” as compared with a tax system.

In addition, the study concludes that the higher risk and volatility of an unhindered market “are likely to induce suppliers to take early action to hedge against carbon risks.”

The study appears in The Energy Journal.

Here’s how the authors came up with their conclusion: Yihsu Chen of UC Merced and Chung-Li Tseng of New South Wales created a scenario in which a small firm that owns a coal-fired power plant considers investing in a clean technology to provide electricity for its customers.

In this case, the authors chose a natural gas-fired power plant. The authors then asked, which scenario – a cap-and-trade or a tax system – would provide a better incentive to go forward with clean energy?

Using a variety of models and contingencies, the authors found that cap and trade provided the best incentive.

Cap and trade, or emissions trading, is a market-based system in which the government sets a limit, or cap, on the amount of pollutants an industry, manufacturer or other entity can emit.

The government then issues the company a set number of permits based on this cap. If the company reduces its emissions so it is below its cap, it can then trade the excess permits on a market with other companies that may need more permits, because they have exceeded their cap.

In the tax system, companies are taxed for a set amount of emissions.

In the case study the authors created, the cap-and-trade system allowed for less-expensive energy and an incentive to get into greener technology early.

How? Politicians and tax-system proponents have argued that a tax system provides predictability to the system. An investor would know the future costs of permits and not have to worry about risk. And that should provide confidence for industry to make long-term investments.

But according to the authors, it’s the risk that makes the cap-and-trade system so much more effective.

Consider plug-in hybrid cars, said Chen.

“You can run the car on gas if the electricity price is too high,” he said. “Or you can run the car on electricity if the gas price is too high. It is the flexibility or options value associated with this ‘dual system’ together, with uncertain permit prices, that makes firms willing to invest in clean technologies in a cap-and-trade system.”

In other words, he said, “firms can actually benefit from uncertain permit prices.”

The Climate Action Reserve, a national offsets program based in California, would not comment on the study.

California plans to have a cap-and-trade system in place by 2013.

This post originally appeared on California Watch, a project of the Center for Investigative Reporting.

With the President headed for Mexico for a two-day summit, I was struck last week by the juxtaposition of two headlines that jumped out of a daily environmental news digest.

One headline read: “MEXICO AIMS TO BRING CO2 CUT PLAN TO CLIMATE TALKS.” The other, just above it, referring to similar efforts in this country, read: “CLIMATE BILL MAY FALL BY THE WAYSIDE.”

“With the fight over health care reform absorbing all the bandwidth on Capitol Hill,” Lisa Lerer wrote for Politico, “Democrats fear a major climate change bill may be left on the cutting-room floor this year.”

Granted, Mexico’s contribution to global greenhouse gas emissions is reportedly about 2%, or a tenth of the U.S. contribution, so one might argue that there’s a lesser job to do there. But with less than four months remaining before the next major U.N. climate conference, it raises the grim prospect that while other nations press on, the U.S. could arrive in Copenhagen empty-handed, which is to say without meaningful carbon legislation to show.

At the same time last week, the 16-nation Pacific Islands Forum called for a 50/50 commitment from developed nations; a 50% reduction in greenhouse gas emissions by 2050. Many of those island nations are on the hot seat as rising seas levels could make them among the first to lose substantial real estate before the end of this century.

At his first climate summit for governors last fall, Governor Arnold Schwarzenegger introduced a video from then President-elect Obama, in which he promised that his presidency would “mark a new chapter in America’s leadership on climate change.”

Praising the governors in attendance for their own climate initiatives, the newly elected President declared that “Too often Washington has failed to show the same kind of leadership. That will change when I take office.”

Of course “Washington” includes Congress, which is still dithering over the major carbon emissions bill championed by the new President. It squeaked through the House by nine votes and now looms as a 1,400-page pig that the Senate python will attempt to digest or regurgitate. Either way, what comes out is unlikely to closely resemble what went in.

Meanwhile the whole cap-and-trade concept has been coming under increasing scrutiny and skepticism. Last month, when the non-partisan Public Policy Institute of California polled Californians on the subject, more respondents favored an out-and-out carbon tax than cap-and-trade (56% to 49%). The Western Climate Initiative, a regional cap-and-trade pact that is a keystone of California’s climate strategy, AB 32, remains in limbo while western legislatures wait on Congress.

So when the Governor convenes his second climate summit in L.A. next month, billed optimistically as “The Road to Copenhagen,” he and his fellow “subnational leaders” (Wisconsin, Michigan & Connecticut governors are currently signed up) may find that the ball is still in their court. According to a news release from the Governor’s office, “climate leaders from around the world will come together and collaborate on efforts to further the global fight against climate change.”

They’ll do it with the same question on the table as last year: Can they count on Washington to take up the reins?