Will AB-32 and CARB Make California ‘Uninvestable’?

On June 2, 2005, California governor Arnold Schwarzenegger announced an initiative to curb greenhouse gas emissions in California as a step toward addressing global warming. In his speech, the governor declared: “The debate is over. We know the science. We see the threat, and we know the time for action is now.” He often pointed to Britain as an example that California should follow in curbing CO2 to stop anthropogenic global warming. He launched AB-32 which we live with today prompting renewable energy, which is driving up the cost of energy. As the cost of energy increases and become more unreliable companies are leaving the state, seeking location with cheaper energy and fewer regulations that stifle business development and growth.

Now the renewable model the that former Governor Arnold Schwarzenegger wanted California to follow is a “Deepening Energy Crisis: Britain Has Become ‘Uninvestable’, Analyst Warns”

Danny Fortson, The Sunday Times

The German owner of Npower is set to write off hundreds of millions of pounds on the value of its British power plants in the latest sign of a deepening crisis among the big six energy suppliers. RWE, one of Europe’s largest power companies, will reveal the British loss as part of an expected £4bn writedown of the value of its fleet of power stations.

The loss arises from pollution taxes that are forcing the closure of old coal-fired plants. Big subsidies for renewable energy, meanwhile, have made even gas-burning plants, which are much cleaner than coal stations, loss-making.

The hit will alarm Whitehall, which is increasingly worried about the lights going out. Companies have stopped building new power stations amid a political and regulatory backlash, sparked last year by Ed Miliband’s pledge to freeze energy prices.

RWE, for example, has not commissioned a new plant in Britain since 2009, when it broke ground on a big wind farm and a gas-fired plant in Pembroke. Since then it has sold out of a consortium to build new nuclear plants, closed down plants capable of lighting more than 4m homes, and cancelled a proposed £4bn offshore wind farm. […]

Peter Atherton, analyst at Liberum Capital, said Britain had become uninvestable as political pressure over soaring household bills has intensified. “I can think of a dozen very good reasons not to invest in the UK, and not one good one to invest here this side of the election,” Atherton said.

Now I ask you is this the model we want to follow? Is CARB creating a state which no reasonable person would consider investing in?

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About Russ Steele

Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.
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2 Responses to Will AB-32 and CARB Make California ‘Uninvestable’?

  1. Sean says:

    The problem in the UK is that they have imposed a carbon price floor that is currently ~$24 per ton of carbon and the European ETS scheme only prices carbon at 1/4 to 1/3 that value. On top of that, the price is set to nearly double by 2020. Energy cost are already causing a great deal of financial hardship. The Brits have coal but most coal fired plants will be decommissioned in a couple of years. Nuclear is very expensive to build and natural gas is nearly triple the cost in the US. The system is set up to make renewables the only option for power generation by making fossile fuel too expensive with a high carbon price. Along comes the Labor party leader Ed Milliband saying he will freeze consumer prices for 18 months but leave all the carbon pricing mechanisms intact. The UK was already in a bind with generating capacity due to the loss of its coal plants and Milliband suggests a policy guaranteeing losses for those who build new electric power capacity and the public was found to be receptive to the idea. So the the UK power sector is not getting any investment.
    California already got rid of coal, is dependent on natural gas and hydro for base load power and has a limited amount of nuclear. Natural gas is cheap and it’s renewables are being guaranteed and subsidized by the Feds. California has the generating capacity it needs and would only be in serious hurt if the drought persisted and natural gas prices shot up. High margin ventures will still find the golden state attractive but low margin businesses may have to leave to compete, just as they have been doing for a decade. I think the energy intensive ones left a long time ago.

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  2. Russ Steele says:

    Worried about bloated budgets, declining industrial competitiveness, and citizen backlash, European nations have been retreating from green energy for the last four years. Spain slashed solar subsidies in 2009 and photovoltaic sales fell 80 percent in a single year. Germany cut subsidies in 2011 and 2012 and the number of jobs in the German solar industry dropped by 50 percent. Renewable subsidy cuts in the Czech Republic, Greece, Italy, Netherlands, and the United Kingdom added to the cascade. The RENIXX Renewable Energy Index fell below 200 in 2012, down 90 percent from the 2008 peak.
    Read more at http://www.commdiginews.com/environment/renewable-energy-in-decline-less-than-1-of-global-energy-11004/#G5oKys83CBKbYFiA.99

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