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Regulators Tackle California's Landmark Climate Law

Californians will have to drive cleaner cars, use less electricity and live closer to work to achieve the greenhouse gas reductions mandated under the state's global warming law.

SACRAMENTO (AP) -- Californians will have to drive cleaner cars, use less electricity and live closer to work to achieve the reductions in greenhouse gases mandated under the state's landmark global warming law.

Those are among the measures called for in a draft proposal to be released Thursday by state air regulators who are charged with setting climate rules to implement the law signed by Gov. Arnold Schwarzenegger two years ago.

"We are asking all Californians to join with us in this effort to reduce the pollution that causes global warming," state Air Resources Board Chairwoman Mary Nichols told reporters in a conference call.

The proposals contained in the 75-page draft plan reveal for the first time the methods regulators are considering as they decide how the state will meet the law's requirements.

Most of the ideas have been floated for months, but making them work is expected to be difficult. In many cases, the proposals are general and still undergoing cost analyses.

Any new regulation must go through a complex rulemaking process and could be delayed by legal challenges. The state already is fighting the U.S. Environmental Protection Agency in court over a 2004 regulation related to vehicle tailpipe emissions.

Republicans in the state Legislature are threatening to hold up the state budget this summer unless the global warming law is delayed.

Members of the California Air Resources Board acknowledge the difficulties but say California must do its part to combat global warming.

Warming temperatures are projected to reduce the Sierra Nevada snowpack -- a major source of the state's water supply -- and threaten the habitats of native plants and animals.

Rising sea levels could erode the state's coastline and top the maze of levees throughout the Central Valley.

To reach California's global warming target, regulators say oil and gas refineries must produce less-polluting fuels, utilities must generate a third of their electricity from renewable sources by 2020 and auto manufacturers must build cleaner-burning cars.

Local governments will be asked to build residential developments near public transportation, shops and businesses in an effort to reduce the number of miles Californians drive.

Homeowners will be encouraged to put solar panels on their roofs and install solar water heaters, potentially resulting in an average savings of $200 a year in gas and electric bills.

Such policies are estimated to cut 133.8 million metric tons of greenhouse gases, 80 percent of the amount needed to get to the 1990 levels by 2020, according to the draft plan.

The remaining 20 percent could be met by the state's major emitters -- utilities, the oil and gas industry, manufactures -- as part of a cap-and-trade program, Nichols said.

Under such a program, businesses that cannot cut their emissions because of cost or technical hurdles would be allowed to buy emission credits from companies that have achieved cleaner emissions. Schwarzenegger and some federal officials embrace such a carbon market.

"We believe it's the most secure and enforceable way to get the reductions that are called for under the statute," Nichols said.

Environmentalists and the Democrats who wrote California's global warming law are skeptical. They say monitoring such a market is exceptionally difficult and that more needs to be done to greatly reduce the emissions of carbon dioxide and other greenhouse gases produced by industry.

Exactly how industries will be asked to buy and sell credits remains one of the most complex and unanswered aspects of the plan. Nichols said regulators want to design a system that would link California to the Western Climate Initiative -- a consortium of six other states and three Canadian provinces designing a regional trading program.

While regulators favor the cap-and-trade approach, the Air Resources Board is studying whether it should instead levy a so-called carbon fee on harmful emissions. That alternative could provide the best incentive for change, Nichols said.

Regulators also are weighing a smaller, separate carbon fee on California's largest emitters. That could raise the $50 million a year needed to administer the global warming program.

What it will cost industry and Californians to reduce emissions remains unclear.

Economic models project the global warming plan would boost the state's economy 1 percent higher than if it did nothing to wean itself off carbon by 2020, Nichols said. The board plans to detail costs later this summer before it adopts the final global warming plan at the end of the year.

Business leaders say the board is moving too quickly, citing the lack of detail on cost and other key aspects of implementing the law.

"We don't really know whether what's being proposed in this roadmap are cost-effective or not," said Catherine Reheis-Boyd, chief operating officer at the Western States Petroleum Association. "You certainly do not want to have policies that end up reducing consumers' ability to drive from A to B, heat and cool their home or turn their lights on."

The plan also envisions achieving greenhouse gas reductions through programs that encourage sustainable forestry and capture methane gas at landfills. Drivers could get money to trade in polluting cars for more fuel-efficient ones.

"Cap-and-trade isn't a silver bullet. It's one possible tool in the tool kit," said Chris Busch, an economist at the Union of Concerned Scientists. "I think the larger message is (that) a whole package of policies is needed to do the job."

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