Look West, Obama

California has also pioneered the development of large-scale solar thermal installations — basically, huge rows of mirrors in the desert that use concentrated sunlight to create heat, which can then be used to generate steam and to drive the turbines on a conventional generator. Until recently, interest in large-scale solar installations was booming in the West, in part because they are the only renewable power that can compete head-to-head with coal plants both on price and scale. "The biggest problem right now is simply keeping the flow of capital open so we can get these projects financed," says John O'Donnell, a clean-tech entrepreneur and former executive at Ausra, one of California's largest solar-thermal developers.

As for nuclear reactors and coal plants — if California is any indication, their future isn't rosy. There are only two nukes in the state, and no coal plants to speak of (although California imports 15 percent of its electricity from coal plants). Until a solution to nuclear waste is found, it's unlikely that any new reactors will be built in the state, even if smaller, cheaper plants are developed. As for coal, California has created something called an emissions performance standard, which effectively prohibits the state from importing electricity generated by coal plants that don't capture and store planet-warming pollution. Since there are no coal plants in America that fully capture and store CO2 emissions — it is an expensive and unproven technology — this amounts to a statewide ban on coal-fired electricity. Emissions performance standards are widely viewed as a powerful tool to slow the proliferation of dirty coal plants, and they are likely to be yet another California invention that will show up in Obama's energy legislation.

Paradoxically, California's push for renewable energy has highlighted what most energy experts consider the weakest link in the system: the grid. "If you can't make the connection, it doesn't do you any good," says Rhone Resch, president of the Solar Energy Industries Association. The problem is not only getting rights of way and other clearances to build new transmission lines. The grid also needs to become smarter — not just pushing power out to consumers, but allowing two-way communication, like the Internet. With a smart grid, utilities could automatically dial down air conditioners on a hot day by three or four degrees, saving huge amounts of money on peak-power generation. Consumers could get better feedback on electricity prices, helping them to tame their inner energy hog. Pacific Gas & Electric, one of the largest utilities in California, has invested $2.3 billion in smart meters, positioning itself as the Google of energy services. And thanks to Al Gore, who has been a tireless promoter of the smart grid, the Obama administration has already gotten the message. Early versions of Obama's $825 billion economic-stimulus bill include $11 billion in incentives for a smart-grid development, the largest investment for any energy initiative in the bill.

Finally, there is the problem of cars. Detroit may be going belly up, but that only increases the need for Washington to provide a clearheaded vision for the auto industry. Although Schwarzenegger is still pushing for a Hydrogen Highway, everyone else in California has already concluded that the future of the automobile is electric. The state has by far America's highest rate of hybrid-car ownership, and the movement now is toward plug-in hybrids and all-electric cars. The shift has been driven in part by the need to meet the state's increasingly strict clean-air mandates, and in part by California's hacker culture, which sees electric cars as big, fun PCs on wheels.

California has long taken the lead in the fight to ban gas guzzlers, but progress has been hamstrung by the fact that fuel-efficiency standards are set at the federal level. California challenged that authority in 2007 when, spurred by the passage of ambitious climate legislation that commits the state to cutting carbon emissions by 25 percent by 2020, the state sued the EPA to allow it to regulate greenhouse gases as a pollutant. Although the Supreme Court ruled in California's favor, the Bush administration refused to yield. On January 26th, Obama indicated that he will extend regulatory authority to California and 13 other states, setting the stage for them to crack down on pollution from cars and making it more likely that tougher fuel standards will be adopted nationwide.

If and when that happens, Schwarzenegger will deserve much of the credit. The governor has pushed for stricter emissions standards for vehicles since 2005, and he spearheaded a high-profile lawsuit against the Bush administration for failing to heed the Supreme Court. On President Obama's first day in office, Schwarzenegger sent him a letter urging him to "move America toward global leadership on addressing climate change."