Fossil Fueling the Green Agenda

Fossil Fueling the Green Agenda

By Allysia Finley in the Wall Street Journal

Jerry Brown added to the hot air at the United Nation's climate summit this week with a speech ballyhooing California's cap-and-trade program and renewable mandate. But in his breathless vapor, the Golden State governor inadvertently hit on the irony California's green follies have been politically and economically enabled by the U.S. fossil-fuel boom.

"We've got a goal to have one-third of our electricity sector renewable by 2020. We're at 23 percent today and we will make it probably in the next three or four years," the governor tooted. "The people themselves have been involved when those who oppose carbon pricing put the measure to a popular referendum. And in that vote just a few years ago, the people voted overwhelmingly to stay the course."

This is a reference to a 2010 referendum that would have suspended the state's climate law, AB32, until the unemployment rate fell below 5.5%. At the time, the costs of the anticarbon agenda hadn't yet become apparent. California's renewable mandate wasn't ratcheted up until 2011, and its cap-and-trade auctions didn't start until last year. The cap on carbon emissions from transportation fuels doesn't kick in until next year.

Sixteen Democratic Assembly members wrote a letter this summer urging the California Air Resources Board to delay the program, which they feared would send gas prices soaring. Democratic Assemblyman Henry T. Perea of Fresno even introduced legislation to postpone the program for three years. "Before trying to grab another $2 billion out of Californians pockets to put in the state coffers without discussion," Mr. Perea implored, "let's take a pause and investigate reasonable alternatives."

The bill died in the legislature, but the governor alluded to the groundswell of opposition in his speech. "There are advertisements being purchased on the airwaves of California in an attempt to persuade the people that cap-and-trade should somehow go away, that it's going to raise the price of oil," he said, wryly adding that "luckily the price of oil has been coming down ever since those ads went on the air just a month or so ago. So somebody's watching over California."

The truth is that the glut of oil being produced from U.S. shale—in part via fracking—has helped reduce gas prices. Luckily for Mr. Brown and his environmentalist friends, the oil boom will also mitigate a gas price spike in California next year. Although Californians may ultimately pay more for gas because of the carbon regulations, they might not feel it.

Consider the state's divestment from coal and renewable mandate. The average retail price of electricity in California has increased by 2.37 cents per kWh in the last three years—or about 15%—compared to about 1.42 cents nationwide. Yet electricity prices would be a lot higher in California (and nationwide) were it not for the natural-gas surfeit from fracking. The price of natural gas, which provides about 50% of California's electricity, has fallen by more than half since 2008.

Mr. Brown is smart enough to appreciates how the fossil fuels are in effect subsidizing his expensive anti-carbon agenda, even if it's an inconvenient truth that the Al Gore crowd would rather ignore.