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States Bridle Against “One-Size” Carbon Rules

Next week the US Senate will take the wraps off a long-awaited national energy and climate bill, which–even before its unveiling–is already making California businesses and regulators nervous.

Though exact language has not been revealed, the compromise bill reportedly includes sections that would nullify state and regional programs to regulate carbon emissions. That does not sit well with Mary Nichols, California’s chief carbon regulator. “When it comes to energy policy and the environment, one size truly does not fit all,” Nichols told reporters in a Tuesday conference call. Nichols chairs the California Air Resources Board, which is the lead agency charged with implementing the state’s Global Warming Solutions Act, passed in 2006.

The state has already invested three years and more than $100 million dollars (approximately $40 million per year, according to a policy brief issued last week by the state’s non-partisan Legislative Analyst’s Office), laying the groundwork for sweeping new regulations, including a carbon trading scheme with several other Western states. The regional cap-and-trade program known as the Western Climate Initiative could also be jeopardized by the current Senate bill, though from most appearances, the program is already languishing.

Businesses also have much at stake. Jan Smutny-Jones heads the Independent Energy Producers Association, whose members generate almost half the electric power produced in California. “My members are making literally billion-dollar decisions about infrastructure that’s going to be around in California generating electricity or transporting electricity to customers for the next 40-50 years, and they kind of need to know sooner rather than later, in terms of what the actual rules of the road are gonna be,” Smutny-Jones told me in his Sacramento office on Monday. “Having the rules change is disruptive,” he said.

California Senator Barbara Boxer, who co-sponsored the first Senate version of the bill last fall, says she does “not support federal preemption” but also wants to avoid overlap between the state and federal systems. “It depends on how the bill is written,” Boxer told reporters at the recent state Democratic Convention. “I’ve had environmentalists say ‘Well if we do a trading system on the credits, we want one system, we don’t want two systems,’ so there’s some areas where it may make sense.”

Nichols offered little latitude in her remarks on Tuesday.  “We need to put down a marker here and remind the senators that they will not have an effective climate program without the states,” she said. “We don’t want there to be any room for doubt about whether states are permitted to do things that advance their economic and energy agendas.” Nichols cited large amounts of “green” venture capital flowing into California as fruit already borne by the state’s actions toward reducing carbon emissions.

The Senate bill is expected to be rolled out on Monday. Optimists are hoping that a finished bill could reach the Senate floor by June or July, according to a report from Reuters news service.