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.”
