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IN THIS ISSUE – “Audacious and Achievable” or “Just to Gain Publicity”?
- Newsom Issues 2nd Order for “Audacious” Air & Water Quality Protections & Conservation
- Carmakers Push Back on Newsom’s Order Banning Gas Engines
- California’s Road to Economic Recovery is a 2-Year Journey with No Map
- Pandemic, Fires & Housing Crises Have Permanently Altered LandscapePoor Planning by Regulators & Utilities Caused Blackouts; Renewable Goals Questioned
- Images of the Golden State
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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FOR THE WEEK ENDING OCT. 9, 2020
Sacramento Bee & CalMatters
Citing a need to tackle the growing problem of climate change, California Gov. Gavin Newsom gave the order for state agencies to conserve 30% of state land and coastal water by no later than 2030.
The move is a bid to store carbon in the state’s natural and working lands and remove it from the atmosphere, according to a statement from the governor’s office.
The order directs state agencies to pursue strategies and partnerships that focus on healthy soil management, wetlands restoration, active forest management and boosting green infrastructure, according to the governor’s office.
“It’s an audacious goal, and it’s an achievable goal,” Newsom said shortly before signing the executive order on Wednesday.
California becomes the first state in the nation to take such a step, the Democratic governor said, and it does so as part of a broader international movement.
Newsom committed to protecting 30% of California’s land and coastal waters by 2030, signing an executive order that directs the state’s Natural Resources Agency to develop such a blueprint by February 2022.
But in many ways, the state has already achieved that goal — raising questions as to whether the governor’s executive order was largely symbolic. Federal studies suggest that around 46% of the state’s terrain is owned by the federal government. With so much of that land undeveloped it raises questions about whether the goal has already been met. But the organization Defenders of Wildlife published a report in May saying that only 22% of the state’s land and 16% of its ocean is protected. The group’s calculations are based on the assumption that an area isn’t protected if activities like mining or logging are at play.
Interestingly, the executive order also codifies two bills that failed to pass the Legislature earlier this year — Assembly Bill 3030, which would have set a goal of conserving 30% of the state’s land and waters by 2030, and Assembly Bill 2954, which would have directed agencies to sequester carbon in the state’s natural and working lands in a effort to reduce greenhouse gases.
This legislative bypassing could rankle some lawmakers, who have chafed under Newsom’s expanded authority amid the pandemic and pushed for a greater role in decisionmaking. More executive orders are likely — when Newsom banned the sale of gas-powered cars starting in 2035 in an executive order less than two weeks ago, he said his team was “working on a series of additional executive orders” addressing climate change.
The governor said that the new order builds off of the momentum generated by the executive order regarding fossil free cars by 2035, as well as other measures being taken by his administration to combat climate change.
Newsom cited record-hot temperatures, drier weather and heavier rain activity as consequences of the changing global climate.
The effort, coined the “30 x 30” goal, is part of an international vision with countries like Britain, Canada and the European Union among the many taking part.
“California, as the fifth largest economy in the world, needs to flex its muscles, it needs to assert itself,” Newsom told reporters Wednesday on a farm in Solano County. “Hopefully [it will] jumpstart efforts, similar efforts in other states across this country.”
A major theme of Newsom’s plan is to maximize the amount of carbon that is stored in plants, forests, water and soil. Too much carbon in the atmosphere is what fuels climate change, but it’s good for the soil, Newsom says. His goal is to unify farmers, landowners and conservationists around the climate effort — even though they “haven’t always seen eye-eye” — so the state can be more resilient to climate changes.
“We’re committed to working [together and] incentivizing the kind of behavior that I think resides in each and every farmer and rancher,” he said.
The governor’s move was hailed by the Center for Western Priorities, whose executive director, Jennifer Rokala, said in a statement, “Accelerating climate change and plummeting biodiversity are plainly visible across America right now. Historic fire seasons and crippling droughts are gripping the West, with impacts that will be felt for years to come. But there is hope that the coming decade will be one in which our leaders step up to meet the most pressing challenges of our time.”
The Center for Biological Diversity also approved of the move, though not without a caveat.
“We hope other states and ultimately the federal government follow California’s lead. However, Gov. Newsom can’t effectively combat climate change and protect biodiversity without also addressing oil and gas production. We know that burning the fossil fuels in the ground will heat the planet well beyond 1.5 degrees Celsius and push many animals and plants towards extinction,” said Shaye Wolf, climate science director at the center.
The move was less well-received by Republicans in the Legislature.
The Senate GOP Caucus tweeted in response to the announcement, “This is an overreach. Newsom isn’t even hiding behind COVID-19 emergency powers any more.”
Last month Gov. Gavin Newsom, seeking a breakthrough on climate change during a year of record wildfires, signed an executive order banning the sale of new cars in California that run on gasoline starting in 2035.
And once again, the auto industry is pushing back. Responding to Newsom’s order, automakers said they’re happy to build more electric cars — but they can’t force people to buy them. Industry executives said consumer demand for electric vehicles has been disappointing.
“Neither mandates nor bans build successful markets,” said John Bozzella of the Alliance for Automotive Innovation, the industry’s main trade association.
To California officials, the resistance sounds familiar.
Mary Nichols, chairwoman of the California Air Resources Board, said the auto industry routinely opposes the state’s anti-pollution initiatives, only to find a way eventually to make them work.
“There’s definitely a pattern at work … in which the industry fights against any tightening or any new regulation, and then complies,” said Nichols, who served on the air board during the 1976 controversy. “We have been through this before.”
Newsom’s order certainly has a historic quality to it, taking the state’s decades-long crusade against air pollution to new levels — the capital of America’s car culture, and home of the world’s fifth-largest economy, is pledging to take fossil-fuel cars off the road.
To achieve that, the state will have to dramatically expand its infrastructure for electric cars, starting with the construction of thousands of additional battery-charging stations. Some in the auto industry, noting California’s recent rolling blackouts, question whether the state’s beleaguered power grid would be able to handle the demand.
“You’ll have more grid stress,” said industry analyst Karl Brauer, of the car-buying site iSeeCars.com.
But as the largest market for consumer goods in the country, California wields enormous influence over car-buying habits across the country. Brauer said he expects other states to mimic Newsom’s 2035 directive.
Before Newsom acted, a handful of countries had already pledged to eliminate the internal combustion engine by 2035 or 2040, including Britain, Canada, Sweden and Israel. That’s one reason why Nichols is convinced Newsom’s order is “absolutely feasible.”
“They’re competing with each other to sell (electric vehicles),” she said. “They’re busting their rear ends to try to get there, not because of our mandate but because of worldwide competition.”
Katina Rapton, general manager of Mel Rapton Honda in Sacramento, said there’s one big problem with California’s efforts to eliminate gas-powered cars: Californians love them too much to give them up.
“Used car sales are going to quadruple,” she said. “(Owners) are going to be taping those things together ‘til the cows come home.”
It’s true that Californians have been enthusiastic buyers of hybrids, which run on gas and electricity. They’ve also purchased more zero-emission vehicles — including all-electrics, fuel cells and plug-in hybrids — than any other Americans. According to Veloz, a Sacramento nonprofit that tracks the industry, Californians have bought more than 726,000 zero-emission vehicles, or ZEV’s, since 2011. That’s nearly half of all ZEVs purchased in the United States.
But it’s still barely 4% of the more than 17 million cars and light trucks, including minivans and SUVs, purchased in California since then.
Stanley Young, spokesman for the Air Resources Board, said the agency forecasts that 8% of new-car sales in 2025 will be ZEVs. Around the auto industry, such numbers provide fuel for skepticism about Newsom’s goal of 100% ZEV sales by 2035.
“It’s something just to gain publicity … a knee-jerk reaction,” said George Peterson, president of AutoPacific, a consulting and research firm based in Orange County.
Certainly, California has been aggressively promoting electric vehicle sales. Consumers can qualify for tax incentives of up to $7,000 under the state’s “clean vehicle rebate program.”
Manufacturers, meanwhile, must meet annual sales mandates for electric vehicles. The mandates vary according to company size, and those that exceed their targets can sell their excess “credits” to competitors that are struggling.
For all that, the sales lag. Peterson said surveys show few car-buyers — maybe 3% to 5% — even consider shopping for pure electric vehicles, even in California. The figures haven’t budged in a decade.
A major stumbling block is a fear of running out of electricity on the highway.
Most electric vehicles need to be charged every 250 miles at most. The Sacramento Bee has reported that California has plus another 35,000 shared facilities at offices and apartment complexes. The stations are mainly clustered in high-income ZIP codes in cities such as Santa Monica and Menlo Park, and are sorely lacking in most of rural California.
“Can you imagine being out on the Jackson Highway and you run out of charge?” Rapton said. “The infrastructure’s just not there. Just because they build them doesn’t mean people are going to buy them.”
Others are opposing Newsom’s order on economic grounds. Owners of gas stations say their businesses could be imperiled.
“The executive order by Governor Newsom is very scary for our industry,” said Michael Tooley, whose family owned Tooley Oil Co. owns 13 stations in Northern California. Most are Shell stations.
Tooley said he’s installing chargers at Shell stations his company owns on Truxel Road in Natomas, and on Stockton Boulevard in Elk Grove. The cost: $200,000 for a pair of chargers.
Converting to a non-fuel future? Tooley is having trouble getting his arms around the idea.
“It would be expensive to replace (fuel) dispensers with EV chargers,” he said in an email. “There would be a great deal of underground work that would need to be done to accommodate this change and it’s hard to know if there is a business model for it.”
Five years before Newsom issued his order, a major automaker was making some very unwelcome headlines in California and around the world.
Volkswagen in September 2015 was caught in a horrific scandal over pollution from its diesel cars. Investigators from the Air Resources Board and the federal Environmental Protection Agency discovered that VW had installed rogue software on its vehicles, enabling the German manufacturer to evade restrictions on emissions of smog-forming pollutants. The incident cost the company billions of dollars in fines, repairs and other expenses.
Today Volkswagen has become an evangelist for electric vehicles. As part of its punishment, it’s invested $2 billion on charging stations and other programs to promote electric cars, including $800 million in California.
Nichols said the company is seeking to become a global ZEV powerhouse — in part to atone for its sins. The day after Newsom issued his order, Volkswagen announced European pre-sales of a new electric model called the ID.4.
“The cheating scandal … definitely helped push them,” she said.
VW also was a charter member of a group of automakers that broke with their peers and sided with California last year in its ongoing legal fight with the Trump administration over greenhouse-gas reductions in conventional cars and light trucks.
The automakers — Volkswagen plus Ford, Honda, Volvo and BMW — recommitted in August to the California regulations, which call for significant cuts in carbon emissions in new cars sold through 2026. The Trump administration, in alignment with the other major automakers, has preempted California’s regulations and substituted a less stringent protocol for reducing greenhouse gases. California is suing Trump over the issue.
Trump’s administration, should the president win re-election, has already signaled it would over-rule Newsom’s attempt to phase out the internal combustion engine. That would surely spark another wave of litigation.
In the meantime, though, carmakers are continuing to roll out new electric cars.
“We agree with Governor Newsom that it’s time to take urgent action to address climate change,” Ford said in a statement. “That’s why we’re proud to stand with California in achieving meaningful greenhouse gas emissions reductions in our vehicles as we electrify our most iconic nameplates like the F-150 and the Mustang Mach-E.”
GM added: “General Motors has demonstrated an unwavering commitment to an all-electric future with sales of the Chevy Bolt EV, the first affordable EV with 259 miles of range, and new vehicles from our upcoming Ultium-powered line-up including the Cadillac LYRIQ EV, GMC HUMMER EV, and Cruise Origin.”
So why is much of the industry still taking a skeptical attitude toward Newsom’s 2035 directive?
Nichols said GM and many of its peers realize electric cars are the future but are still stuck in the past in many respects.
Businesses shuttered by the pandemic are slowly reopening, but technology complexes are quiet, their workers carrying on from home indefinitely. The smoke-filled skies had started to clear, but new fires have arrived in a fierce wildfire season that shows the intensifying effects of climate change.
Now California and its $3 trillion economy are confronting a profound question: How much will go back to normal, and how much has been permanently changed?
This is still the home of 40 million people, Hollywood, Silicon Valley and the country’s largest farming industry and port complex. In August, amid the pandemic, Apple became a $2 trillion company, just two years after hitting $1 trillion.
But the message from the recent calamities is clear. If California is to continue leading the nation’s economy deep into the future, its leaders and residents will have to rethink where and how the state grows.
For decades, California has operated under a trade-off: In exchange for high taxes and a high cost of living, its companies reap the rewards of an educated populace, an inviting lifestyle and a culture of innovation.
The events of 2020 have forced a closer look at the calculus. While the state is now recovering from the coronavirus, an assessment from the U.C.L.A. Anderson Forecast predicts it will be at least two years before the economy has fully recovered. Mirroring the national economy, office vacancies are rising, small businesses are teetering and temporary layoffs are being made permanent.
Superficially, the forecasts for California are no better or worse than the nation’s, with some sectors, like tourism, badly hurt and others, like technology, barely touched. But between climate change and remote work, the state is facing questions that uniquely cut to the core of its economic identity.
In the case of the pandemic, companies may increasingly ask whether the high cost of California cities is worth it if their workers can work remotely with the same productivity. Some companies may choose to leave the state altogether. And the spate of wildfires has brought new scrutiny to the spread-out development patterns that have accommodated an expanding population — and pushed people to cheaper inland areas most exposed to fire.
“These have long been questions that have been in the back of people’s minds, but now there’s an actual drill,” said Ted Egan, chief economist for the City of San Francisco.
Even before the pandemic, there were indications that that was starting to shift. Silicon Valley companies were increasingly putting jobs in engineering hubs in cities like Austin, Texas, and Toronto. Now they have an opportunity to run a remote-working experiment on a scale that wouldn’t have otherwise been tried.
Google and Facebook have said they will allow employees to work remotely until 2021. Stripe, a payments company, recently announced that it would pay employees $20,000 to leave the Bay Area if they accepted a salary reduction of up to 10 percent based on the cost of living wherever they went. Citing a shift toward more employees working from home, Pinterest, which allows people to save images to virtual pinboards, paid $90 million to cancel a lease for 500,000 square feet in an unbuilt office building in San Francisco.
Nobody knows how efficient large-scale remote work will be over time, or if such arrangements will be attractive once people feel safe on public transportation and urban amenities like bars and restaurants have reopened. But if workers untethered from their offices flee the state, or companies start basing more high-paid workers elsewhere, it will have huge ramifications for California’s outlook. The past decade of economic expansion was heavily indebted to the boom in technology, and the state’s budget, with its highly progressive tax structure, is unusually dependent on wealthier residents.
Despite the diversity of California’s vast economy, there is near-universal agreement on one barrier to growth: the exorbitant cost of housing. The median price for single-family homes and condos in the state is closing in on $600,000, according to the real estate site Zillow, more than twice the national level. The figure reflects a longstanding shortage that has also caused rising rents, crowded households and two-hour commutes used to offset the cost of living. Much more than taxes, the reason that companies move jobs out of the state is lower-priced housing and the lower labor costs that go with it.
“When you think of any economy in the long run, you need young, aggressive thoughtful folks who see an opportunity to build a life,” said Christopher Thornberg, founding partner of Beacon Economics, a consulting firm in Los Angeles. “And if you continue to squelch young population growth with bad housing policy, those folks may well turn somewhere else.”
Economists and planners have long counseled that the best way to relieve this pressure is to build more housing near the coastal job centers, but California has continued to sprawl, a pattern that has undermined the state’s own emission-reduction goals by encouraging longer commutes, while placing more homes in fire zones. In 2010, the last year with available data, nearly a third of California housing was in the so-called wildland-urban interface, where wildfire risk is greatest, according to the U.S. Forest Service.
“Climate change is here — this is not some far-off theoretical thing — and we build houses over a multi-decade time frame in which they are going to be standing in these areas well into the time when the impact on the climate will be much more severe,” said Kate Gordon, senior adviser to Gov. Gavin Newsom on climate and director of the Governor’s Office of Planning and Research.
“So there’s no question we have to think differently about how we grow in the future, with a focus on compact development in previously built-out areas and not taking over undeveloped land,” she added.
This would seem like an easy enough mandate. After all, California has invested heavily in renewable energy, was the first state to mandate solar power in new homes, and is run by a governor who has spoken of a “a climate damn emergency” and recently signed an executive order banning sales of new gas-powered cars in 15 years.
Yet there is ample indication that the politics of living with climate change are even more fraught than the politics of trying to prevent it. See, for instance, the debate over insurance rates in wildfire areas: California is trying to keep rates low in fire-prone areas, something voters want, even though many experts say states should let insurance rates rise in the long run to dissuade building in flood- and fire-prone areas that are increasingly vulnerable.
Or look at the state’s long-running debate over housing. Going back to 2017, the Legislature has begun each of the past few years with a flurry of bills intended to curb local zoning regulations and increase density by steering growth to existing areas — in other words, the same measures that climate experts say are crucial to tamp down wildfire risk. But despite a Democratic supermajority, the most ambitious bills have been undone by a strange-bedfellows coalition of tenant advocates worried about gentrification and suburban voters fearing neighborhood change.
“When it comes to making the massive changes necessary to adapt to warming temperatures, it’s really California against itself, and we’re going to need to make some major reforms if we want to survive this period,” said Micah Weinberg, chief executive of California Forward, a nonprofit group pushing to shape the state’s economic and government agenda.
Having a prosperous and growing economy ultimately means finding new ways to add jobs and homes. So California’s looming battles over climate change promise to be another round in a debate that predates statehood, which is how many people it really wants, and how much water will be required to sustain them.
In a season of perpetual fires and apocalyptic orange skies, and with home prices only continuing to rise, it seems open to question whether the state can get much bigger. But even in the age of climate change, some economists project that growth will find a way.
In a 2006 book, Robert Mendelsohn, an economics professor at Yale who focuses on the impact of climate change, sketched a surprisingly rosy picture of what the California economy might look like in 2100, assuming global temperatures rise 1.4 to 3.3 degrees Celsius. The state has 92 million residents. They live with less water, more heat waves and more forest fires. Still, somehow, there is a thriving economy.
There are small changes, like Northern California yards that in place of lush vegetation are decorated with rock lawns like those in Phoenix. There are bigger changes, like neighborhoods of fourplexes replacing single-family homes. Dr. Mendelsohn is aware that his vision of denser development probably sounds like hell to many Californians.
It even sounds a bit like hell to him, a professor who is nearing 70 and lives in a single-family home in Connecticut. “It might be hard for me to make that adjustment,” he said, “but that doesn’t mean a future generation couldn’t see something different.”
A world that is warmer, drier and more crowded may not be the world they asked for, but they’ll still be looking for jobs, while coping with the world as it is.
Two months after Gov. Gavin Newsom called for an investigation into California’s first rolling blackouts in nearly two decades — during which time residents were twice warned that blackouts could return — a group of key state agencies released their preliminary findings.
The findings raise serious questions about the ability of California’s electrical grid to meet ambitious environmental goals, including 100% clean energy by 2045 and Newsom’s recent order banning the sale of new gas-powered cars in 2035. The agencies pinpointed three main reasons why nearly 1 million customers lost power over the course of two days in August:
- Inadequate preparation for a “climate change-induced extreme heat storm.”
- Insufficient energy in the early evening hours due to the state’s increased reliance on clean energy.
- Complex market mechanisms, including one that allowed power plant operators to sell energy to other states even as a shortfall loomed.
To prevent future blackouts, the three state agencies that oversee energy — the California Independent System Operator, California Public Utilities Commission and California Energy Commission — said they would revise their plans to account for extreme weather events, ensure energy generation and storage projects are completed on time, accelerate new projects, and “enhance” market practices.
Gary Ackerman, a longtime utilities and energy consultant: The report “point(s) to a lot of work that must be done by all three agencies … and I wonder how much any of those recommendations will be or can be put in place by next summer.”
The state has struggled to meet its own deadlines tor transitioning from fossil fuels to renewable energy. After the rolling blackouts, it voted to keep four gas-powered plants running, although they were supposed to be phased out by the end of 2020. And over the past three years, it shut off some gas generation in anticipation of battery storage it has yet to build, according to the Los Angeles Times.
Ed Randolph of the Public Utilities Commission: “Our planning processes may have been a year or two off on when we needed to have the resources available.”
California is the most populous state in the nation, with 39.5 million residents—more than the smallest 21 states combined. It is also a huge state, ranking third in area, and an incredibly diverse place, with climates that range from desert to rain forest. From the Los Angeles metropolitan area to Yosemite National Park, from Death Valley to Mount Shasta, here are a few glimpses of the landscape of California, and some of the wildlife and people calling it home.
This photo story is part of Fifty, a collection of images from each of the United States.