April 26, 2010 / 7:27 PM / 9 years ago

SCENARIOS-Challenges to California climate change law

SAN FRANCISCO, April 26 (Reuters) - California’s climate change law is the most aggressive in the United States and it faces challenges this election year.

Some of the same forces that may stall federal climate legislation, including oil companies and businesses concerned by higher energy prices, are now taking aim at California’s landmark 2006 law.

Known as AB 32, the law includes vehicle and fuel standards, a market for pollution trade (still in the works), as well as “green” building and planning policies.

Its future depends on three factors: the November governor’s race, a ballot effort to put the law on hold, and the fate of the federal climate bill.

Following are possible outcomes of the brewing fight.

GOVERNOR’S RACE DECIDES SHORT-TERM FUTURE OF LAW

Democratic candidate Jerry Brown would leave the climate law in place while Republican front-runner Meg Whitman, the former chief executive of eBay Inc (EBAY.O), would put key provisions on hold for a year. The two are running neck and neck in polls.

The 2006 law gives the governor a sort of line item veto. He or she can suspend part or all of the law’s regulations for a year in the event of extraordinary circumstances, catastrophic events or the threat of significant economic harm. There is no limit on the number of successive one-year suspensions.

BALLOT MEASURE WOULD PUT LAW ON HOLD FOR YEARS

A ballot measure that would suspend the climate change law until unemployment falls to 5.5 percent for four consecutive quarters is being circulated now and is likely to qualify. But whether Californians would pass it is tough to predict.

Economists expect it will take years before unemployment, currently well over 12 percent, drops to that level.

Backers have contributed more than $1.9 million, which generally is enough to to pay for a successful signature-gathering campaign in California.

Texas refiner Valero Energy Corp (VLO.N) leads contributions with $500,000. Other oil companies and Missouri’s conservative Adam Smith Foundation also have donated heavily.

Silicon Valley heavyweights, such as Google, and movie industry environmentalists, have supported climate change issues in the past, potentially making for an expensive contest.

Californians generally believe that regulation, clean energy and economic growth are compatible but they are also increasingly concerned about the economy.

RENEWABLE ENERGY — A SEPARATE QUESTION

The state seems likely to keep to its goal of getting 33 percent of its electricity from renewable sources by 2020, although the public utility commission says that time frame is unrealistically ambitious.

Whitman and Brown both support the goal. But the 33 percent target was set in an executive order and the next governor could rescind the goal with a single signature if he or she chose to.

WASHINGTON COULD GET IN CALIFORNIA’S WAY

The federal bill passed by the U.S. House of Representatives last year included a measure to put California’s pollution market on hold while a federal one develops. Cap-and-trade markets limit emissions and let big polluters like power plants trade the right to emit.

A Senate version in the works is expected to ban cap-and-trade by states, and California fears it could preclude other measures, whether intentionally or through court interpretation.

However, the Senate bill is facing longer odds of passage as it fights for consideration against other big issues, particularly immigration. If passed, it would have to be reconciled with the House one to become law, and many analysts see a higher chance of failure than passage. (Reporting by Peter Henderson; Editing by Mary Milliken and Bill Trott)

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