EcoWatch - Carl Pope
"This was retail politics and oil lost," was how Adrienne Alvord of Union of Concerned Scientists summed up the stunning
environmental victory Tuesday in the California legislature, a victory which cemented the state's commitment to a 40 percent reduction in
climate pollution by 2030.
 |
| It's
not accidental that states providing climate leadership are the states
with the biggest clean energy sectors, including California. |
Only a few weeks ago there was a strong consensus that the oil
industry, by spending millions of dollars on behalf of a cadre of
moderate Democrats in the Assembly, had blocked just such a doubling
down on the state's existing 2020 goals. For the oil industry, victory
was an existential necessity. Only by holding future
climate
commitments hostage could the industry hope to get Gov. Brown to
abandon the state's existing mandate that by 2020 the carbon content of
fuels be cut by 10 percent. As a practical matter, the requirement means
roughly 20 percent of California's more vehicles will be driving on
something other than oil—electricity, natural gas or
biofuels.
And
oil knows it cannot withstand a competitive transportation fuels
market. Once California creates such a market and builds businesses that
can produce low carbon fuels at scale, fuels competition will go global
and oil's empire will wither. But it looked like oil had survived to
fight another day. Gov. Brown had signaled his next move by forming a
ballot committee for a (high-risk) initiative for the fall of 2018. But a
small group of climate and environmental justice advocates refused to
let the Assembly moderates off the hook. Demanding a vote, they
re-energized their broad coalition of main-line businesses, EJ
advocates, labor, climate greens, the faith community, clean tech and
clean fuels businesses, local government and public health advocates.
Assembly
Speaker Anthony Rendon told them he would give them a vote once they
had the votes—and on Tuesday he pulled the trigger, giving the oil
industry, which thought it had won, only 24 hours to regroup. It wasn't
enough and the Assembly passed SB32 by 47 votes, a six vote margin over
the 41 needed. The California Nurses Association was heard from, but so
was Ebay. Gov. Brown and the White House weighed in, but a lone
Republican, Assemblywoman Catherine Baker joined them in supporting
progress. Wednesday the Senate concurred and the bill, linked to an
environmental justice focused companion bill, went to the governor for
his signature.
Why the victory? Quite simply, retail politics.
Clean energy
now provides far more stimulus and creates far more jobs than fossil
fuels. Clean power is seen by the public as the linch-pin of the state's
economic future. Jobs on the ground trump oil industry ads on the
screen. It's not accidental that states providing climate leadership are
the states with the biggest clean energy sectors—California,
Washington, Nevada, Oregon—and Iowa, with its nation leading wind sector
and a public utility, Mid-America, that is planning to shortly hit 85
percent renewables and go on to 100 percent.
And it's cheaper.
The oil industry is in a state of shock. Their
press release
bizarrely asserted that Rendon had scheduled the vote to "cover up" the
fact that the state's latest auction for carbon emission permits had
attracted few buyers—a result oil called "terrible." The auction simply
reflected the fact that emitters, uncertain if the law would be extended
past 2020, did not know how many permits they needed to buy. The oil
industry conceded as much, saying "Today's miserable auction result
reflects the market's lack of certainty." But it is revealing that oil
called it "terrible" and "miserable" that the cost of carbon permits was
low—demonstrating again that what they fear is not that decarbonizing
will cost too much and hurt the economy, but that it will prove
irresistibly cheap and strand them. Also revealing—SB32 was written
precisely to provide the certainty whose absence the oil industry
allegedly deplores!
(In fact, the legislature is going home next
week and Rendon had to bring the bill up more or less when he did. The
short notice was tactical—but hardly conspiratorial).
Ideological, right-wing opponents of climate progress and clean energy stayed more on message,
releasing a poll purporting
to show that the public, all the other evidence to the contrary, didn't
really favor tougher clean-up of carbon pollution or California climate
leadership after all.
Read carefully, however, the poll says
something quite different. It confirms that most Californians want to
move forward on clean energy and climate, believe that such progress is
good for California even if others do not lead and want action. Even
California Republicans are part of this consensus. Sixty-two percent of
California Republican voters think that climate change is either a very
serious or somewhat serious threat to the state. Again, of Republicans,
67 percent expect the changes resulting from global warming to occur in
their lifetimes. A majority favor the state's current climate goals and a
plurality favor the longer-term, more ambitious goals just passed.
It is true that, if nudged to believe that after such action,
"hundreds of local manufacturing facilities would be shut down and
thousands of middle-class jobs would be lost in California" large
majorities of Republicans, and Democrats and Independents, lose their
appetite. But if you said to the same sample that ambitious climate
progress would mean "continued economic growth, an end to air pollution,
cheaper gas and billions of dollars of new exports for California
industries" the supportive numbers among Republicans would probably jump
from a plurality to a super-majority. The latter statement is the true
one, it turns out—and, more or less, it is what most California voters
are experiencing—which explains why, un-manipulated, even Republicans
are happy that the state continues to move forward.
But California
is not the only arena where oil's long regime is coming to an end.
Investors are watching warily as the majors—Chevron,
Exxon, BP and Shell have now
accumulated an unprecedented $184 billion in debt,
fallen far short ($40 billion short in the first half of 2016) of their
promised goals of paying their dividends from profits, not borrowing.
Shell, Chevron, Exxon and BP have all seen their previous platinum grade
credit ratings cut a notch. To placate investors, the majors pledge
that they have new (but far from transparent) business plans to someday
make money again—if only oil will stay at some magic level. For BP it's
$50-55/barrel. Unfortunately, it has not been in that range since 2014.
Many
of the independent oil producers, of course, have gone bankrupt. Oil
remains stubbornly below $50. Most independent analysts believe that for
the oil majors, prices in the $75 range are required to compete with
Persian Gulf and other OPEC members in the long term. And those prices,
unequivocally, require one thing: a continuation of oil's monopoly in
transportation fuel.
California this week called the question.
That monopoly is going away. Oil has lost before, but never because the
retail politics of its competitors proved more compelling. This was no
decisive battle. There may be none, just as there is no moment when the
fate of the Roman Empire was sealed.
But the sands of time are running. Oil's empire is in its decline and fall.
Links