Monday, August 29, 2016

California Passes Stricter Pollution Targets: Bringing Business Around

California’s legislature approved a bill (SB 32) in August, 2016 that extends the climate targets from reducing greenhouse-gas emissions from 1990 levels by 2020 (the former target) to just 40 percent of 1990 levels by 2030.[1] A second law, which includes increased legislative oversight of California regulators and targets refineries in poor areas, passed as well. Diane Regas of the Environmental Defense Fund pointed to California’s climate leadership. “As major economies work under the Paris Agreement to strengthen their plans to cut pollution and boost clean energy, California, once again, is setting a new standard for climate leadership worldwide.”[2] At first glance, it would seem that the legislature had freed itself from big business to pass the bills, but the sector itself was split. I submit the anticipation of a refreshed “cap and trade” program as an alternative (or mitigating factor) to stricter regulations played a role. Simply put, using the market mechanism in government regulation makes the stricter targets more palatable to market-based enterprises.
To be sure, oil companies and some manufacturers fought the bills hard. Of the higher costs and out-of-control regulators supposed or at least advertised by big oil, Governor Brown labeled the lobbying campaign a “brazen deception.”[3] Given the companies’ vested commercial interests, that lobbying effort could have been flagged as a conflict-of-interest situation. Accordingly, that campaign’s credibility should have been hard won, with Californians applying strict scrutiny to the “information.” Sadly, it is not uncommon for regulators to cast aside such a conflict because they are fine with relying on information provided by the very companies being regulated. 
That big oil did not dominate the debate may be due in part to Governor Brown’s use of the market mechanism to appeal to business in spite of the higher target in the legislation. Specifically, the legislation increased the government’s leverage in getting wayward polluting companies to participate in the cap and trade program, which requires companies to buy permits in order to release greenhouse gas emissions. According to Governor Brown, the passage of SB32 would increase the leverage that the government has to “reach an elusive deal with businesses that would prefer a flexible program like cap and trade instead of more stringent requirements to slash pollution.”[4] Business managers prefer flexible programs, and bringing in the market mechanism provides a sense of familiar ground.
Therefore, it is possible that the anticipation of a renewed, fuller utilization of the market-based method increased support for the bills from the business sector, or at least mitigated possible opposition, such that big oil and the climate-denying stalwarts in manufacturing could not dominate the lobbying. Put another way, incorporating the market mechanism either directly or indirectly as an alternative to tougher regulations applied across the board is a political strategy that can split the business vote such that the sector itself does not dominate lobbying campaigns in one direction and thus thwart the voters’ judgments, which should consider the arguments of both sides of a proposal.  

[1] Chris Megerian, “’A Real Commitment Backed Up by Real Power’: Gov. Jerry Brown to Sign Sweeping New Climate legislation,” Los Angeles Times, August 25, 2016.
[4] Megerian, “A Real Commitment.”