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For the Bush administration, saving energy was not only a fool's game — it was a threat to the American way of life. "Conservation may be a sign of personal virtue," former vice president Dick Cheney declared in 2001, "but it is not a sufficient basis for a sound, comprehensive energy policy."
In the world of politics, everyone knew exactly whom Cheney was mocking: California. During the oil crisis of the 1970s, the state was one of the first to recognize that promoting blind consumption of energy was a dangerous idea. So California started experimenting with policies designed to increase energy efficiency and force utilities to buy more electricity from renewable sources. Now, with Barack Obama in the White House, the state may turn out to be the template for a new national energy policy. California produces climate-warming pollution at half the national rate, leads America in solar-energy production and ranks second in wind energy. But its most stunning achievement is in the very area that Cheney ridiculed: Over the past three decades, while per capita electricity usage in America grew by more than 50 percent, California's consumption stayed flat, even while the state's economy doubled. "California is proof that you don't need to choose between growth and sustainability," says David Roland-Holst, a resource economist at UC Berkeley.
President Obama, who has pledged to fight global warming and to create 5 million new green jobs, clearly plans to draw on California's success. The biggest signal is his choice for energy secretary: Steven Chu, a Nobel Prize-winning scientist who headed the Lawrence Berkeley National Laboratory in California. In the past, the job has gone to party hacks and political cronies, men certain not to disrupt the Energy Department's traditional emphasis on building weapons and recycling nuclear waste. Chu, by contrast, is a hero among clean-tech entrepreneurs, an innovator who can barely mask his disdain for Big Coal and other dirty-energy industries. In Berkeley, he remade one of the nation's top physics labs into a cutting-edge research center on alternative energy. "He saw it as a project of the same magnitude and urgency as building the bomb in World War II," says Eddy Rubin, director of the lab's genomics division. Under Chu's leadership, the lab won $500 million for bioenergy research from BP, one of the world's largest energy companies. "By picking Chu," says Joe Romm, a former assistant energy secretary, "Obama makes clear that he understands the dire nature of the climate problem and wants to pursue an aggressive, technology-based strategy."
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In addition to Chu, Obama has filled a number of key posts with Californians. Nancy Sutley, the new head of the White House Council on Environmental Quality, was deputy mayor of Los Angeles; John Holdren, the new White House science adviser, spent decades as a professor at Berkeley, as did Christina Romer, one of Obama's top economic advisers. Californians are also taking the lead in Congress: House Speaker Nancy Pelosi, who represents San Francisco, is deeply wired in with the clean-tech crowd in Silicon Valley. Ditto for Sen. Barbara Boxer, who chairs the Committee on Environment and Public Works, and Rep. Henry Waxman, the new chair of the House energy committee.
In other words, it's clear that America's energy future will be shaped in large part by Californians. The question is, what will that future look like?
First, expect a big push on efficiency. "That's the big story in California," says Dan Kammen, head of the Renewable and Appropriate Energy Laboratory at UC Berkeley. "It's all about using less to get more." In California, the patron saint of energy efficiency is an 82-year-old physicist named Art Rosenfeld. During the oil crisis of the 1970s, Rosenfeld found himself sitting in long lines at gas stations and thinking about how much energy Americans wasted in their cars, homes and offices. At the Lawrence Berkeley lab, he founded a group called the Center for Building Science that developed key technologies for compact fluorescent light bulbs, efficient refrigerators and energy-saving windows. More important, Rosenfeld pushed California to develop the nation's first efficiency standards for appliances and buildings, as well as requiring utilities to "decouple" their profits from the amount of electricity they sold. As a result, the energy needed to cool a new home in California has declined by two-thirds since 1975, even though today's homes are about 50 percent bigger. "If California's electricity demand was still growing at six percent a year like it was in the 1970s," Rosenfeld says, "the coast between San Francisco and San Diego would be dotted with nuclear plants."
Efficiency is a no-brainer for Obama because it pays back so quickly. Since 1975, California's building codes have resulted in energy savings of $30 billion — more than $2,000 per household. Roll those policies out nationally, and the savings would be immense. A nationwide investment of $21 billion in building efficiency, one study estimates, would save consumers more than $8 billion in energy bills every year. And when you reduce energy consumption, you also reduce pollution. Nationwide, the amount of electricity saved by federal refrigerator standards alone — $15 billion a year — is equal to the annual output of about 80 coal plants. A recent report by the McKinsey Global Institute, a leader in energy research, concluded that further improvements to America's energy efficiency could offset 85 percent of the projected national demand for electricity by 2030. In other words, if the rest of the U.S. followed California's lead, we could more or less kiss new coal plants goodbye — a huge leap forward in the fight against global warming.
Pushing efficiency also creates jobs. All told, California's policies have created an estimated 1.5 million new jobs, with a combined payroll of $45 billion. These are not traditional "green jobs" — installing solar panels, erecting wind turbines. These are jobs created by the simple fact that people have more money to spend on things other than energy bills. "When people save money on energy, they spend it outside the carbon supply chain, on local goods and services," says Roland-Holst. "These are bedrock jobs that can't be outsourced."
Besides efficiency, the other big success in California is something called a renewable portfolio standard — a policy designed to force energy providers to diversify their power sources. In 2002, the state decreed that utilities must get 20 percent of their power from renewable sources by 2010. Energy companies quickly moved to add more than 5,900 megawatts of renewable power, leading Gov. Arnold Schwarzenegger to bump the requirement up to 33 percent by 2020. Twenty-eight states now have some kind of renewable portfolio, and Obama has called for a national standard requiring 25 percent of America's electricity to be generated from renewable sources by 2025.
Much of that new power is likely to come from solar energy. In California, the push has been driven not just by the state's plentiful sunlight, but by good old-fashioned greed: Whoever figures out how to harvest the sun's power cheaply and efficiently will be the Bill Gates of the 21st century. It also helps that building a photovoltaic cell is not much different than building a computer chip — T.J. Rodgers, one of the pioneers in the chip business, is now the primary financial backer of SunPower, one of the fastest-growing solar companies in Silicon Valley.
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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."
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Other states beyond California also have successful programs that should be incorporated into Obama's national energy policy. Colorado passed strong net-metering laws, allowing consumers to generate their own renewable power and sell excess capacity back to the utilities. Texas crafted five Competitive Renewable Energy Zones, where new transmission lines are being built, helping to make the state the national leader in wind power. Ten states in the Northeast have forged a regional initiative that enables industries to "trade" carbon emissions while placing mandatory caps on overall pollution levels. And New York City has launched a host of green initiatives to increase open space, create 200 miles of new bike routes and install wind turbines on skyscrapers.
At this point, however, the main obstacle to a greener energy policy isn't political will — it's economic reality. The plummeting price of oil has slowed the push for fuel-efficient cars. Solar plants and wind farms all over the country are stalled because the tax credits that drove many banks to fund renewable energy projects are worthless when banks aren't making money. But even here, California has innovative solutions. The city of Berkeley plans to offer homeowners funds to install solar panels and make efficiency improvements, then allows them to pay the money back over 20 years as a special tax added to their property bills. "It takes away the biggest hurdle of getting renewable power deployed, which is upfront costs," says Kammen of UC Berkeley, who helped design the program. Although the program is just getting under way, more than 1,000 cities around the world are already looking to duplicate it.
Despite its progress, California still has lots of energy problems to sort out. One big roadblock is getting approval from federal agencies like the Bureau of Land Management and the U.S. Forest Service to build new transmission lines and renewable power plants. The state has also failed miserably to upgrade public transportation and reduce dependence on cars. More important, California's accomplishments are minuscule compared to the changes required to truly tackle global warming and establish energy independence. But given the state's early successes, it's no surprise that Obama is looking west for solutions.
"What has happened in California is all about the power of thinking differently," says Daniel Dudek, the chief economist for the Environmental Defense Fund. "If you're looking for a road map to the future of energy in hard times, this is it."
[From Issue 1072 — February 19, 2009]
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