OpEd: Cap and Trade will Give California Edge

The San Fran­cis­co Chron­i­cle just pub­lished my op-ed piece today.  Read the full arti­cle here or have a read below.  Look for­ward to your thoughts in the com­ments section!

The clos­er you get to a goal, the tougher the going can get.

As Cal­i­for­nia pre­pares to launch America’s lat­est cap-and-trade pro­gram for green­house gas­es, oppo­nents are mak­ing a goal-line stand. They’re try­ing to per­suade Cal­i­for­ni­ans that a car­bon mar­ket will some­how hurt the state’s recov­er­ing economy.

As a Cal­i­for­nia investor, I know the oppo­site is true. The new car­bon mar­ket is one ele­ment in a broad suite of busi­ness-friend­ly clean ener­gy and effi­cien­cy poli­cies that Cal­i­for­nia has care­ful­ly craft­ed over decades. These mea­sures might attract con­tin­ued oppo­si­tion from in- and out-of-state oil inter­ests, but they are strong­ly sup­port­ed by Cal­i­for­nia vot­ers, and with good rea­son. They are turn­ing the Gold­en State into a glob­al leader in the fast-grow­ing clean ener­gy sector.

California’s for­ward-look­ing poli­cies on ener­gy and effi­cien­cy have touched off an incred­i­ble flow­er­ing of prof­itable cre­ativ­i­ty at busi­ness­es, uni­ver­si­ties and nation­al labs across the state. As a result, about one-third of U.S. clean tech ven­ture cap­i­tal flows to California.

Since 2005, the clean tech sec­tor has grown 10 times faster than the aver­age job growth in any oth­er eco­nom­ic sec­tor in the state. Since the state’s clean ener­gy and cli­mate law (AB32) was passed in 2006, $9 bil­lion in ven­ture cap­i­tal invest­ment has flowed to clean-tech firms in Cal­i­for­nia. Our state leads the nation in solar pow­er gen­er­a­tion, and wind gen­er­a­tion has dou­bled since 2002.

All this for­ward-look­ing action on ener­gy is set­ting up Cal­i­for­nia busi­ness­es to grab a fat por­tion of a fast-grow­ing glob­al mar­ket. World­wide, invest­ment in renew­able ener­gy alone grew by 5 per­cent last year, to hit a record $260 billion.

As nations around the world tack­le cli­mate change, com­pa­nies sell­ing solu­tions con­tin­ue to grow. California’s deci­sion to reduce green­house gas emis­sions has cre­at­ed tremen­dous oppor­tu­ni­ties for entre­pre­neurs, sci­en­tists and busi­ness strate­gists to devel­op tech­nolo­gies and ser­vices that will help busi­ness­es accom­plish their green­house gas emis­sion goals. Those are exact­ly the kinds of com­pa­nies ven­ture cap­i­tal­ists love to fund: high-tech firms with tremen­dous growth poten­tial, not just in Cal­i­for­nia but also across the coun­try and around the world.

And rather than dic­tat­ing to pol­luters exact­ly how they have to clean up their acts, California’s cap-and-trade pro­gram will har­ness the pow­er of the mar­ket to con­trol green­house-gas emis­sions. The pow­er com­pa­nies and oth­er large pol­luters affect­ed will decide for them­selves how to pro­ceed. A com­pa­ny that is espe­cial­ly effec­tive in clean­ing up its act can make mon­ey on the deal, by sell­ing unneed­ed pol­lu­tion allowances to oth­er firms whose oper­a­tions run dirtier.

Set­ting aside all these busi­ness-cen­tric argu­ments, there are a lot of oth­er rea­sons to sup­port AB32 and California’s cap-and-trade pro­gram. Pub­lic health groups point out that these poli­cies are cut­ting air pol­lu­tion and sav­ing Cal­i­for­ni­ans from asth­ma and heart attacks. Envi­ron­men­tal groups approve of tack­ling cli­mate change, which threat­ens California’s coast­line, snow­pack, forests and oth­er nat­ur­al resources.

Con­sumer groups praise AB32 because it will help our state’s fam­i­lies make ends meet, even­tu­al­ly cut­ting elec­tric­i­ty bills by about 5 per­cent. But as an investor – and espe­cial­ly in these rocky eco­nom­ic times – it is the busi­ness argu­ment that I find so per­sua­sive. A strong car­bon mar­ket sends a clear mar­ket sig­nal. It will spur invest­ment, inno­va­tion and eco­nom­ic growth. It will help solid­i­fy California’s lead­er­ship in the emerg­ing clean ener­gy economy.