Energy Interests Spending Big to Stop California Emissions Law

September 18, 2010

In 2012, a California law aiming to reduce greenhouse gas emissions in the state by roughly 25 percent over the next decade, is scheduled to go into effect. The Global Warming Solutions Act of 2006 (or AB 32,) will give the California Air Resources Board sweeping new powers to set emissions limits and reduction measures—and set the stage for the creation of a regional cap and trade system called the Western Climate Initiative.

But a powerful group of business interests including two billionaire brothers who recently came into the public eye for their role in financing the Tea Party, are hoping to head off AB 32 with a ballot measure called Proposition 23, or “the California Jobs Initiative.” Charles and David Koch, whose Koch Industries has an annual revenue approaching $100 billion—and has several times been ranked among the country’s top air polluters—have donated $1 million to groups organizing for the law.

The campaign, which emanates from a series of political action committees, reportedly has received 98 percent of its funding from a group of oil companies led by Valero Energy Corp. and the Tesoro Corporation—with 89 percent of that money coming from out-of-state. (Koch Industries is based in Wichita, Kans.)

Big Money Resting on National Implications

So why is Proposition 23 so popular with out-of-state energy companies? In a letter sent to more than 400 members of the National Petroleum Refiners Association, the group’s president Charles Drevna called the the measure “the difference between life and death for our industry in this century.” Drevna went on to write that the new regulations could one day spell the end for gasoline-powered transportation, saying “You simply can’t achieve these drastic reductions in carbon and still refine petroleum for use as a motor fuel.”

But the real danger for the oil industry isn’t AB 32 itself but its potential to set the stage for similar regulations in other states—and its implications for a proposed federal cap and trade bill. In their campaign to overturn AB 32, opponents see a chance to send a message to lawmakers all over the country that even in one of the nation’s greenest states, voters do not support carbon-cutting legislation.

If That’s Grass, Then Where Are the Roots?

Despite its financial and ideological ties to the surging Tea Party movement—which boasts more than 200 local chapters in California alone—there is little evidence to suggest that the Prop 23 campaign has been successful so far in organizing the group’s members around the issue. Yes on 23 has staged two rallies, with the most recent taking place outside the California Republican Convention in San Diego—but neither attracted more than a handful of participants, and the issue hasn’t been central to larger Tea Party gatherings around the state.

Moderate Republican gubernatorial candidate Meg Whitman has refused to take a firm stand on Prop 23, but has said that she is personally leaning towards voting against it. Whitman has never enjoyed much support from Tea Partiers, but she’s counting on high turnout from motivated conservatives in and outside of the movement to help boost her to victory in November.

Whitman’s refusal to appease those voters on Prop 23 speaks to the reality that Yes on 23 is hoping to use its deep pockets to change: Conservatives in California just aren’t as passionate about that issue as they are others, such as taxes and health care.

‘Make it About Jobs’

Much of the $8.2 million that has been raised to pass Prop 23 will be spent on media buys aimed at convincing voters that the measure is primarily about jobs, not the environment. Opponents of AB 32 have long warned that the bill acts as a tax on businesses, and will discourage hiring around the state while leading to layoffs in the industries that are most affected. To highlight the alleged economic implications of the law, Proposition 23 was drafted specifically to prevent AB 32 from taking effect until California’s unemployment rate drops to 5.5 percent for four consecutive quarters—something that has happened just three times in the last 40 years.

That economic argument is undercut somewhat by the fact that much of the business community in California opposes Prop 23, with the state’s largest oil companies deciding to remain uninvolved in the campaign to pass it.

Still, as the election nears and voters begin to pay attention to the issues that will be on this year’s ballots, polling indicates that enough voters are still undecided on the measure to potentially tip the scales in favor of its passage. Also working in the legislation’s favor is expected high turnout from conservative Republicans like the Tea Partiers. Whether or not those voters will head to the polls thinking about Prop 23, many are likely to pay close attention to the endorsements of the larger organizations that make up the conservative movement—and those organizations are firmly behind the Koch brothers and Valero in their efforts to stop any and all climate legislation.


Posted in Environment, Incentives and Laws, News
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  • Earl Richards

    The California Jobs Initiative (CJI) is an oil corporation farce and fraud. There is no connection, whatsoever, between greenhouse emission reduction and the loss of jobs. This notion is an insult to the intelligence of the people of California. In fact, there is job growth in the clean, renewable energy industry. Chevron employs 65,000 worldwide and CJI is not going to change this. The only jobs created by the oil industry are clean-up jobs after oil spills and deep water, blow-outs and pump-handler jobs. CJI will make fantastic profits for the oil industry, increase air pollution, especially in communities around their refineries, and there will not be lower gas prices. Koch Industries, Valero and Tesoro are super Enrons. Since when did the oil companies start to show any concern for the unemployed and their families and for small businesses?

  • JamesDavis

    I think the Koch brothers need California to sue them for a billion dollars a year under the Clean Air Act and the Federal Government needs to force the Koch brothers to clean up the environment that they so heavily pollute with their industry like they did BP. The Koch brothers give 600 people a job and kill 6,000 children with their pollution…makes good sense doesn’t it?

  • Charles

    Maybe I have found inspiration for a political sign for the October 30th gathering. Instead of “Don’t Let Junk Science Determine Your Future”, how about “Don’t Let Junk CEOs Dictate Your Future”?

    Remember the people pictured in the article will vote in November, so please do not vote for the couch!

  • Joe

    Pollution I believe in, but carbon global warming is Bull Crap!

    CARBON TRADE = JUNK BONDS

    Chicago Carbon Commission = ENRON

  • Charles

    Joe;

    I was afraid this would happen.

    The Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) states: it is a greater than a 90 percent certainty that emissions of heat-trapping gases from human activities have caused “most of the observed increase in globally averaged temperatures since the mid-20th century.”

    So what is you PhD in? Do you mind posting a copy of your CV?

  • veek

    Hate to part company with the crowd here, but just because a couple of evil capitalists support a cause doesn’t automatically mean the cause is wrong (just because Stalin loved his cat doesn’t mean it’s wrong to love cats). The Gates Foundation appears to support a controversial type of teacher reform, and Mr. Gates is an even bigger capitalist than the Koch brothers, so does that mean teacher reform is automatically wrong? These cases are all examples of “red herrings” or “genetic fallacies.”

    I’m sure Californians won’t be too proud to continue buying much of their electricity from out-of-state places like Nevada or Arizona, just like they aren’t too proud to buy many of their shoes and electronics consumer goods from places with poor child labor protection or few air pollution controls. Many complex issues are probably involved in this state referendum, among them the mayhem that could be produced if states began separately regulating anything they feel like (what if the gasoline you buy in one state could not be taken into another one, or if a laptop you bought in North Dakota would not work in South Dakota?).

    If you don’t like what the oil companies are providing us, then no problem — feel free to boycott automotive fuel, or, at least, greatly reduce your own purchase of it.

  • veek

    Earl Richards, James Davis, and whoever wrote the article:

    Hate to respectfully disagree with much of your postings. You say the oil companies have no concern for the unemployed, their families, and small businesses? Oh, come now! The unemployed, their families, and small businesses all use many, many products that are supplied by the energy companies, including the infrastructure that benefits us all, and products we all take for granted (including lighting, food, medical delivery, and the computers we both used to post our comments). Even many unemployed and small businesses use oil to look for work or customers. Right now it costs about 30 seconds of labor to provide enough light to read for an hour at night; before the oil companies came along it took longer than that one hour. What would you suggest the oil companies do that would be better than that? Send them letters or something? You say the only jobs produced by the oil industry are cleanups? Oh, come now! Oil and low-cost energy make it possible for nearly every one of us to do our jobs, unless we live in a cave somewhere. Try doing without oil or energy (or their derivative products) for a few weeks and you will see what I mean. You say the oil industry is responsible for the murder of thousands of children on balance? Oh, come now! Our public health and medical systems, which have saved so many lives and nearly doubled our lifespans since the 1800′s, greatly depend on reliable energy and oil products. For example, next time you’re visiting a hospital, ask what would happen if oil was not present and what their utility bill is. What would you rather have us do — have physicians and nurses go back to delivering vaccines and treatments using a horse and buggy? Really?? You say the air quality will be decreasing? Oh, come now! The air quality in nearly every area of North America has generally improved greatly over the past 40 years, and that’s largely because of products which were funded, designed, and/or produced by energy company-related scientists, engineers, and researchers. Even alternative forms of energy are going to involve some cost to something, and even those alternative forms will probably be produced in large part by the sacrifices of energy industry scientists, engineers, and researchers (they sure won’t be produced by politicians or government bureaucrats). Even capitalism is not actually about somebody greedily and exclusively lining their own pockets — it’s about satisfying a demand that someone else has for a product, and it arguably relies far more on emergence and interrelationships than on pure greed. Hey, I dislike the idea of exploitation and pollution and greed and profiteering and all that stuff too (perhaps as strongly as you do), but …
    This article, your postings, our president and other purely political grandstanders, the media, etc. appear to paint oil company workers as a gang of intentionally destructive, unscrupulous, qausi-demons, and that’s more than a little misleading. Oil and energy workers are major contributors to modern civilization and to the lifestyle choices we can all make. We should be critical, yes, but if we are to have integrity, we should also be highly grateful for their sweat, sacrifices, and brainpower. We all need to use oil and energy significantly more wisely, the oil companies are far from perfect, and we need to evolve the system, but let’s be realistic and reasonably accurate about this matter, too, eh?
    BTW I do not or have not worked for any oil company, although the place I work uses oil (it’s a health center) and I use oil to drive to work. I am just annoyed at the distortions and I enjoy living in 21st Century civilization.

    Thanks!

  • Samie

    Veek,
    Zach McDonald wrote the article see:
    http://www.plugincars.com/energy-interests-spending-big-stop-california-emissions-law-75517.html

    Veek, lets not get carried away, last time I checked we have Article I, Section 8.3 of the United States Constitution to handle interstate trade.
    (see Gibbons v. Ogden or even Association of American Railroads v. South Coast Air Quality Management District).

    Sorry to pick on you but what mass produced alternative or substitution do we have to petroleum? Also, air & water pollution has improved drastically but we see mixed results in recorded respiratory illnesses and air pollutants/smog in cities like Los Angeles.

    Additionally, veek I agree with your assessment of modern civilization which involves relying heavily on cheap non-renewable natural resources, but as countries continue to advance economically, how can world consumption of non-renewable natural resources be sustainable?

    My comments are usually geared towards the economic side of things not politics. Diverse market activity in creating greater pollution controls is needed and should be encouraged by government (bc of the hidden costs and negative externalities that are not fully priced in markets) while businesses and consumers need to share the costs of diversifying our energy needs for the long-term.

    Sorry JamesDavis, your comment is confrontational & is on the same level as Joe’s….

  • Sri

    Veek,

    No one is opposing the proposition because Koch brothers support it. Koch brothers are being criticized because they promote an evil agenda under false pretenses to safe guard their own profits.

    You make oil companies look like they are being run by Mother Teresa. Yes, Our lives have been greatly improved by innovations during 19th and 20th century. But it’s not like oil companies set up a charity to bring about all those inventions. They merely sold a product, for profit, that is used in many of those inventions. Besides you mostly mention the usages of electricity while defending oil industry. No one is saying we should live without electricity. We just have to shift towards cleaner sources for generating electricity.

    Some kinds of pollutions have been reduced in North America. But that’s only because of earlier regulations forcing the industries to clean up. Now why do you think the same should not be done for Green House Gases? If there is no profit in the industries for cleaning their act and there is no regulation forcing them to clean it up, why would they spend money trying to do that?

    Regulations already vary state to state. California has tougher emissions standards for quite some time now. That didn’t stop the auto companies.

    China is taking lead in wind energy and generating jobs because they mandated their electric companies to use wind power. Texas is the leading state in wind energy because of mandates created by none other than the oil-friendly George Bush. Why would California not benefit from it? Clean power generation is going to be the future. Our choice is really between adapting it now and making US a leading manufacturer of those technologies or waiting till raising fossil fuel prices and international regulations make it a necessity and then importing technologies from other countries.

    And as far as boycotting oil, easier said than done. If there are practical public transportation or electric cars many would happily use those. That’s what the clean initiatives today are trying to ultimately achieve. All the 20th century innovations may not be here if lantern manufacturers had the clout to block electricity or horse breeders had the clout to block automobiles from becoming a reality. Fortunately they didn’t. But the oil companies of today have that kind of power.

  • Tom Schimmel

    “The Global Warming Solutions Act of 2006 (or AB 32,) will give the California Air Resources Board sweeping new powers to set emissions limits and reduction measures—and set the stage for the creation of a regional cap and trade system called the Western Climate Initiative.”

    NOTE: the campaign against AB 32 is called “Proposition 23″. The numbers are reversed, and may cause voters in favor of clean air to become confused. I would think this is totally intentional on behalf of the big oil companies.

    “The campaign which emanates from a series of political action committees, reportedly has received 98 percent of its funding from a group of oil companies led by Valero Energy Corp. and the Tesoro Corporation—with 89 percent of that money coming from out-of-state. (Koch Industries is based in Wichita, Kans.)…”

    “Charles and David Koch, whose Koch Industries has an annual revenue approaching $100 billion—and has several times been ranked among the country’s top air polluters—have donated $1 million to groups organizing…”

    NOTE: The Koch Brothers are using a century-old tactic which basically assumes that voters are too ignorant and unintelligent to make a distinction between AB 32 and Proposition 23. They value their profits over the destruction of nature and their tactics demonstrate this. Please vote for The Global Warming Solutions Act of 2006 (AB 32). Make them accountable. The air is dirty enough already.

  • Charles

    I have nothing but respect for companies making a profit. What I dislike and think is criminal is when a company lies to make its profit. Funding for signs like “DON’T LET JUNK SCIENCE DETERMINE YOUR FUTURE” are fine in the abstract, but not when used to imply that climate change is a vast left wing conspiracy (to do what?). Another sign such as “YES COAL. Clean, Carbon Neutral Coal”, is just a lie. Commercial speech that is a lie should be forced to be removed. That leaves the problem of what is commercial speech. Did the Koch brothers use company funds. If so then it is clear it is commercial speech. If the brothers contributed their own wealth, that is a harder call.

  • Joe

    Who really trust the Government.

    Remember a tree is Smiling because of CO2.

  • veek

    Samie and Sri and Tom: Thanks for you postings. Sorry, I;m justifiably annoyed by all the politically correct, automatic trashing of oil workers and think there needs to be some balance, if we are at all realistic and honest.
    Yes, oil companies are definitely not Mother Teresa, but they will also form a large part of any realistic solution to our problems, and we benefit from understanding them rather than automatically castigating them. They have satisfied a tremendously beneficial human need by providing a resource which has contributed vastly to our lives and the quality of our lives. Let’s not view them like a bunch of spoiled teenagers view their benefactors.
    Yes, they are making a profit — would you prefer that they invest billions in necessary infrastructure/technology/education, repair the inevitable accidents that happen in such a chancy and dangerous industry, gather the necessary capital from investors, make progress in promoting improvements, etc. and just give fuel away for free or put a donation box next the the gas pumps? Would you prefer they be like GM and go incompetent and bankrupt? The government makes more profit on a gallon of gas than the oil companies (and this heavy taxation, btw, is one reason for the notorious tax breaks these companies get). Being politically correct is also no guarantee of greenness, and oil companies are not automatically anti-green — they are doing something practical about problems we all just talk about, have made contributions to anti-pollution technology, and are making progress in alternative sources of energy (i.e. Exxon-Mobil’s great expenditures to partner with Michael Venter in developing biofuels, or the Future Fuels and CO2 division of Shell). Oil execs have less direct control over market forces and alternative development than you might think (they are at the mercy of OPEC too), and gesides, other huge companies (like GE) are investing in alternative technologies, too. Oil is located, extracted, delivered, etc. by market forces which are more related to Emergence and Interrelationships than by a bunch of evil greedy people sitting around a table somewhere, as it is presented in junior high school. Emergence and market forces are fascinating topics in their own right (consider reading M. Shermer and M. Ridley, for example).
    I know little about the California referendum, but imagine it is far more complex than the article indicates (I also imagine, alas, that it is subject to the same distortions, polarization, media hyperschlock, and fantastic shallowness that seems to now characterize our political landscape. Suggestion: ignore ALL political advertising and most of what you hear in the media). The merit of the referendum has little if anything to do with the two brothers’ character anyway. Yes, states are limited in controlling interstate commerce, but this has to be continually watched.
    Again, if you despise big oil, use this as a positive incentive to reduce your consumption of oil. Do it NOW. Don’t wait until “somebody else” makes an electric car or public transit up to your standards. Make the sacrifices, which may mean cutting down on manufactured products and food shipped in from somewhere else, making your own clothes, not taking vacations outside your immediate area, etc. Go ahead — you can do it!

    Let’s not forget that we are reading this forum because we share common ground. We are interested in, and support, alternative energy sources, their implementation, and education. I am saying, though, that we should not demonize an industry whose products we use so often. Oil companies have made their positive contributions to solving future problems and their employees and engineers are probably more likely to respond favorably to a recognition of this. Oil companies can be (and have been) positive agents of change, too, just as we all want to do. Thanks.