United States

United States

Economy loses out to climate vote

UNITED STATES: One clear victory handed to renewables during the US midterm elections in November was the defeat of Proposition 23 in California. This will end the proposal pushed by utilities and other big industrial users to halt climate-change legislation.

In addition to voting for political candidates, the state's direct democracy system allows citizens to vote directly on laws that are quite significant.

Utilities, oil and gas producers, refiners and other big industrial users backed Proposition 23 to stop climate-change legislation amendments made by California in past years - specifically the AB32 global-warming law passed in 2006.

AB32 had two key components for wind energy: it directs California's Air Resources Board (ARB) to enact emissions-trading regulatory policies that would reduce state greenhouse gas levels to 1990 levels by 2020. It also increases the Renewables Portfolio Standard (RPS) from 20% to 33% - the percentage at which the major utilities must source energy from renewables like solar and wind.

Proposition 23 would have stopped the AB32 global-warming law until the state's unemployment rates dropped from the current average of 12% to 5%, a target unlikely to be reached for several years.

California's financial crisis is deeper than that of many US states. Backers of Proposition 23 hoped the voters' economic woes would outweigh their concerns over global warming and renewables, but the voters roundly rejected the assault.

"It was great from a wind perspective that it failed," says Seth Hilton, an attorney with US law firm Stoel Rives. "But there are still questions as to whether ARB has the legal authority to implement the RPS." The legal language allowing the ARB to enact the stronger RPS is on shaky ground and there is a risk that legal challenges could be brought forward to slow its adoption.

Nonetheless, the survival of AB32 means a strong momentum for new clean-power contracts. Utilities are struggling to meet the current deadlines of 20% renewables by the end of this year. The three large utilities collectively served 15% of their 2009 retail electricity sales with renewable power.

However, under flexible compliance rules, the utilities have until 2013 to reach this 2010 threshold. "They're actually in a pretty good position to get quite close to complying with the 20% requirement by 2013," says Hilton. "From a wind developer's perspective, the concern is much more that they are getting close to the requirement. Therefore the pressure to sign new contracts may diminish as we move towards 2013."

The survival of the higher 33% target is a way to keep the pressure on the utilities to continue looking for renewables contracts in California for years to come.

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