OpEd: Cap and Trade will Give California Edge

September 3, 2012, op-ed by Cynthia Ringo in SF Chronicle

By Cynthia Ringo
September 4, 2012

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.