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UPDATE 2-California climate law survives challenge at polls

* California measure to suspend climate change law fails

* Victory for green energy sector, cap-and-trade scheme

* Silicon Valley poured millions into defeat of measure (Adds quotes and analysis, updates numbers)

LOS ANGELES, Nov 2 (Reuters) - One of the world’s most ambitious laws to combat global warming survived a challenge on Tuesday as California voters overwhelmingly rejected a measure that would have put the state’s plans for more renewable energy and a market to curb greenhouse gases on ice.

The defeat of Proposition 23 marked a big victory for Silicon Valley investors, who poured millions of dollars into defending California’s AB 32 law and protecting their massive investments in green technologies ranging from solar power to electric cars.

After the failure of federal climate legislation in Congress this year, the fate of California’s law was viewed as a U.S. turning point -- either away from addressing global warming or toward stronger action to curb greenhouse gases.

“This is reaffirmation that we are a country of some enlightenment,” said Michael Eckhart, president of the American Council on Renewable Energy, a trade group.

“A majority of Californians, even in great stress of unemployment and economic demise, will still accept this responsibility. Rejecting an attempt to destroy the environment is a good thing.”

Opponents of Prop 23 also cheered Tuesday’s election of Jerry Brown as California governor. Brown has said he supports a target of deriving 33 percent of California’s electricity from renewable sources like solar and wind.

“With Jerry as governor, the transformation of our electricity sector will have a captain for the ship,” said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology, an advocacy group.

Supporters of the measure said it would halt a dangerous rise in energy costs at a time when California -- hit hard by the recession, financial crisis and housing meltdown -- can least afford it.

“If we can wait until the economy is better, I’m happy to go green,” said Dan Pendergraft, 58, a chiropractor from Redondo Beach.

When green business is viable “and can pay its own way, I support it,” Pendergraft added.


With 48 of precincts reporting, the “no” vote on Proposition 23 stood at 59 percent, with 41 percent in the “yes” column.

Prop 23, largely funded by oil companies, would have put AB 32 on ice until double-digit unemployment falls to 5.5 percent or less for four straight quarters. That scenario has happened rarely in California in the last 20 years, the measure’s opponents argued.

The “No on 23” campaign also claimed the measure would have taken critical support away from a green business community that has generated billions of dollars in investment and created millions of jobs in the state.

"AB 32 is a stimulus for economic growth and innovation," said Tom Werner, chief executive of California-based solar panel maker SunPower Corp SPWRA.O.

With Prop 23 defeated, SunPower will proceed with a plan to open a San Francisco-area manufacturing facility that will employ 100 people. It would have considered putting the factory in another state if Prop 23 had passed, Werner said.

Silicon Valley investors, who have heavily funded solar and wind energy, biofuels and electric cars, poured money into defeating Prop 23 in recent weeks. In total, the campaign raised more than $25 million.

Notable donors to the "No on 23" campaign in the last few weeks included Microsoft Corp MSFT.O co-founder Bill Gates, Google Inc GOOG.O co-founder Sergey Brin, Intel Corp INTC.O co-founder Gordon Moore and "Avatar" filmmaker James Cameron.

The "Yes on 23" camp, in contrast, raised more than $10 million, much of which came from oil companies Valero Energy VLO.N and Tesoro TSO.N. (Additional reporting by Sarah McBride; Editing by Mary Milliken and John O'Callaghan)