Governor, Chamber at Odds Over Emissions

By Marc Lifsher
Times Staff Writer

March 7, 2006

SACRAMENTO — The California Chamber of Commerce, perhaps Gov. Arnold Schwarzenegger's closest political ally, may split with the governor over his commitment to drastically cut greenhouse-gas emissions.

In an executive order signed last year, Schwarzenegger set firm targets for reducing carbon dioxide pollution beginning in 2010. At the same time, he asked the California Environmental Protection Agency to work with other government departments to develop strategies for meeting the goals.

On Monday, the chamber denounced a draft report produced by the agency's "climate action team" as "not convincing" and a potential burden on the state's economy — especially proposals to levy a new tax on gasoline and diesel fuel sales and to cap carbon dioxide emissions, which are believed to cause global warming.

"We don't know what it's really going to cost," said chamber President Allan Zaremberg.

The draft report says fulfilling Schwarzenegger's pledge to cut carbon dioxide pollution 80% by 2050 actually would create jobs as companies developed new energy-saving technologies — a view endorsed Monday by a group of executives from mainly high-tech firms. Over the next 15 years, the report estimates, 83,000 jobs could be created.

But Zaremberg challenged the state agency to "immediately release all documents and data" used in reaching that conclusion.

A public feud between Schwarzenegger and the state's leading business lobby would be a blow for a governor who recruited a number of his top current and former aides from the chamber's ranks. Schwarzenegger also allied himself with the business group in a series of battles, including the legislative overhaul of workers' compensation insurance laws in 2004 and an unsuccessful effort to pass four initiatives in 2005.

The governor is caught between business interests and members of his staff who are trying to meet his environmental goals, said Dan Schnur, a Republican strategist and UC Berkeley professor.

Schwarzenegger's push for strong state action to curb greenhouse gases also puts him at odds with President Bush. The president favors only voluntary industry action to curb carbon dioxide emissions. He refused to sign the landmark Kyoto Protocol, a treaty designed to reduce global greenhouse gas pollution.

"I say the debate is over," Schwarzenegger said at a conference in June. "We know the science. We see the threat. And we know the time for action is now."

But Schwarzenegger's call to action, apparently, has its limits. Though he's yet to receive the final agency report, the governor has publicly opposed an early recommendation to slap a tax of 2.57 cents a gallon on the wholesale price of gasoline and diesel, money that would be used to finance research into alternative energy sources.

How the governor will react to another controversial recommendation — capping the amount of carbon dioxide released into the atmosphere by industries such as cement manufacturers and electrical power plants — is less clear.

The chamber, which is leading a coalition that includes heavy industry and farming groups, fears that such caps could hurt profits and drive businesses to other states with less restrictive environmental laws.

The caps may be dropped from the climate team's final report in favor of requiring major industries to report their greenhouse-gas emissions to the state, said state EPA spokesman Mike Wintemute. "You have to establish what is a lid. Otherwise, you can never determine whether you are making substantial reductions."

The chamber's objections to putting caps on greenhouse-gas pollution are not shared by all California businesses. Environmental Entrepreneurs, an organization of 500 executives from mostly high-tech companies, said that capping greenhouse gas emissions and even a new wholesale tax on motor vehicle fuels could stimulate California industry and make the state a global leader in developing anti-pollution technology.

Faced with a divided business community, Schwarzenegger needs to stay true to his original convictions of reducing global warming, said V. John White, executive director of the Center for Energy Efficiency and Renewable Technology in Sacramento.

"We understand that there is furious lobbying to keep the governor from following through on the recommendations of his own climate action team," White said. "It suggests that the chamber would rather have California do nothing and not fill the vacuum caused by the stalemate and inaction at the federal level."

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