Why Reality-Based California Will Meet Its Climate (And Broader Environmental) Targets

Steve Zwick

8 September 2018 | Next week, the Global Climate Action Summit (GCAS) will take place in the US state of California, where legislators have passed a bill mandating a carbon-free energy grid by 2045. If Governor Jerry Brown signs that bill, California will become the second US state after Hawaii to set that goal.

More importantly, the state has all the mechanisms in place to achieve it, while also growing its economy, ensuring clean supplies of water, and protecting its endangered species – objectives that Governor Brown and other state leaders have already pledged to uphold, even if federal protections for water are rolled back, as Acting Environmental Protection Agency Administer Andrew Wheeler wants to do, or if protections for endangered species are undermined, as Interior Minister Ryan Zinke hints they will be.

We can be confident the state will achieve these goals in part because it has enacted strict environmental regulations but more importantly because it has embraced flexible ways of enforcing them – namely, it uses market mechanisms to funnel resources into the most efficient and cost-effective ways reducing emissions, purifying water, or protecting endangered species.

On the climate front, for example, its cap-and-trade program imposes a cap on greenhouse-gas emissions from the energy sector, and that cap gets lower and lower over time, while the “trade” part comes from a provision that lets companies buy and sell emission-reduction credits – essentially forcing money into those measures that can reduce emissions fast and cheap first, while more expensive reductions can come later. This program is one reason that California is ahead of schedule in achieving its climate goals, while other states are denying both the reality of the climate threat and the achievability of emission reductions.

The cap-and-trade program also drives money into programs that save or restore endangered forests, which are a key component of the most overlooked climate solution of our day: land use.

In a nutshell, research shows we can get 37 percent of the way to meeting the Paris Climate Agreement targets just by improving the way we manage our forests, farms and fields — often while increasing food yields and reducing the cost of farming — and California’s cap-and-program makes it possible for companies to offset a small part of their emissions by helping groups like the indigenous Yurok people save and manage their forests.

In 2016 alone, this program helped indigenous people and family farms across the United States save the equivalent of 1 million massive mahogany trees, according to Ecosystem Marketplace’s most recent State of Forest Carbon Finance report, and a new proposal could extend these benefits to tropical forests around the world.

But California’s reality-based approach isn’t limited to climate. The state is a leader in the $25 billion-per-year “restoration economy” that directly employs 126,000 people and supports 95,000 other jobs across the United States.

These jobs come because of US federal laws that require real estate and infrastructure developers to fix what they break, so to speak, leading to the creation of “mitigation banks” headed by green entrepreneurs who identify marginal land and restore it to a stable state that performs ecosystem services like flood control or water purification. They make money by selling credits to entities – personal, public, or private – that need to offset their environmental impacts on species, wetlands or streams. These banks do an estimated $3.6 billion every year in business globally, ensuring that conservation investments march in lockstep with new development.

Such practices have led to larger and more contiguous wildlife areas than previously existed, and they infuse massive amounts of money into rural areas, according to a 2015 report called “Estimating the Size and Impact of the Ecological Restoration Economy”.

These programs cover both water and habitat, and California is easily the leader on the habitat front, where activity is more directly driven by the state government, with 123 approved or pending conservation banks – out of 177 total – according the US federal data base (called “RIBITS”, for “Regulatory In lieu fee and Bank Information Tracking System”).

The state also has 75 wetland or stream banks (some banks are approved to sell both conservation and wetland/stream credits), for a total 171 restoration efforts covering more than 80,000 acres – a stunning success, but one that often comes under fire from ideologues on both ends of the spectrum.

Some on the left, for example, claim that market mechanisms let polluters “buy their way out” of their obligations, which ignores the fact that restoration permits are only granted if the impact is net-positive (for example, three acres of habitat must be restored for every acre developed).

By the same token, some on the right – including Interior Minister Ryan Zinke – characterize market-based solutions as “extortion”, which ignores the fact that environmental regulations didn’t just pop into existence for no reason. The Clean Air Act, the Clean Water Act, and the Endangered Species Act emerged in the early 1970s because people got sick of choking smoke, burning rivers, and dying wildlife, while the market mechanisms evolved later, as a way to help companies meet their obligations in cost-efficient ways that best serve the common good.

California’s environmental policies are a blend of state and federal measures that grew out of the environmental crises of the 1960s. They blend the high ideals of environmentalism with the pragmatism of economics, and they can best be described as a collection of tested methods that work and work well, yet are continuing to improve over time.

It’s therefore fitting that this state is hosting GCAS, where global solutions to the climate challenge will be making their American debut.

Steve Zwick is a freelance writer and produces the Bionic Planet podcast. Previously, he was Managing Editor of Ecosystem Marketplace, and prior to that he covered European business for Time Magazine and Fortune Magazine and produced the award-winning program Money Talks on Deutsche Welle Radio in Bonn, Germany.

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