George Shultz challenges California to lead

Capitol Journal

Former U.S. secretary of State George P. Shultz believes it’s crucial to fight global warming to protect national security.

Global warming is created by burning fossil fuel, he says, and payments for foreign oil sometimes wind up financing terrorism.

And Shultz, who’s also a former Treasury secretary, thinks the nation suffers an “economic vulnerability” because of its oil addiction.

“While we have benefited from low-priced energy,” he says, “we’ve also suffered from periodic spikes in the price of oil. Usually recessions go along with it.”

Moreover, continues the man who set up the Environmental Protection Agency four decades ago, “There’s a climate problem connected with the burning of fossil fuels.... The basic facts are pretty clear.”

“So we have a three-pronged set of problems” created by greenhouse gases, he says. “Security, economic and environmental.”

Shultz, 89, has been there, done a lot and thought through much — from the time he was President Nixon’s first budget director to when he was President Reagan’s chief strategist for ending the Cold War. In between, he became president of Bechtel, the engineering giant.

He’s now with the Hoover Institution at Stanford University.

And he’s co-chairman of the campaign against Proposition 23 on the November ballot.

Prop. 23, largely bankrolled by two Texas oil companies ( Valero and Tesoro) that operate refineries in California, would significantly hamper this state’s efforts to reduce greenhouse gas emissions.

The goal is to pare back emissions to the 1990 level by 2020 — a cut of about 30% from what would be emitted if the state did nothing.

Prop. 23 would suspend AB 32 — the 2006 anti-global warming act championed by Gov. Arnold Schwarzenegger — until the unemployment rate in California fell to at least 5.5% for a full year. Unemployment now exceeds 12%.

The act probably would be suspended for “many years,” says the nonpartisan legislative analyst.

Prop. 23 advocates contend that with the economy struggling to recover, it’s no time to experiment with feel-good global warming fights. It would drive up energy costs, spur a business migration out of state and kill jobs, they argue.

“No other state in the union imposes these kinds of regulatory framework,” says Jon Coupal, president of the Howard Jarvis Taxpayers Assn., referring generally to the state’s extensive thicket of business regulations. “They are, quite frankly, deterring business development in California and driving out a significant portion.”

Not all of California’s efforts to control greenhouse gases would be halted. There would still be new vehicle emission standards, a solar-installation program for homes and energy efficiency requirements.

But some ambitious programs would be shelved: a cap-and-trade plan that would permit businesses to buy or sell diminishing allowances for emissions, a “low-carbon fuel standard” for gasoline and a requirement that utilities obtain 33% of their electricity from renewable sources by 2020.

The ballot measure is a major issue in the gubernatorial campaign — at least, in Democrat Jerry Brown’s view. He calls the global-warming fight a defining distinction between him and Republican Meg Whitman. Brown strongly opposes Prop. 23. Whitman is neutral but favors at least a one-year moratorium on AB 32.

Shultz also is a co-chairman of Whitman’s campaign. But he disagrees with her on global warming. Suspending AB 32, he says, “would be a catastrophe.”

But California can’t combat global warming by itself — can’t even make a dent. It’s a worldwide issue, a point the Prop. 23 backers repeatedly make.

“For California to go it alone is suicide,” says Assemblyman Dan Logue (R- Marysville), the ballot measure’s original sponsor. “The economy of California will never recover.”

AB 32 “will have virtually no impact on global warming,” asserts Jack Stewart, president of the California Manufacturers and Technology Assn. “Why do you want to jeopardize California’s economy for virtually no impact?”

Shultz addressed the “go it alone” argument before I could even ask him about it:

“As in a great many issues, a lot of the action and constructive activity, particularly in the United States, comes from the ground up, not from the top down. It comes from creative individuals, creative companies, universities and states that do things that then get emulated and spread.

“Obviously California can’t take these issues on by itself. But it can lead the way. And it can be contagious. And we’ve seen that many times.”

And, Shultz emphasizes, “national security is threatened:”

“ President Eisenhower — a guy whose credentials on national security you had to respect — said that if we imported more than 20% of the oil we used, we were asking for trouble in national security terms. Now we’re over 60%....

“The flow of funds from … oil producers in many cases goes to states that are antithetical to us and are trying to do us damage. And some of the money leaks out into terrorists’ hands.”

Shultz continues:

“People are saying, well, [AB 32] is a job killer. Undoubtedly there will be changes. That’s the idea — to shift away from things that emphasize their dependence on oil....

“Sooner or later, somehow or other, there’s going to be a price put on carbon. So everybody running companies … take a deep breath … better start adjusting to it.

“We’re going to make energy created by the burning of fossil fuels more expensive. That’s the idea. So people will use less of it.

“Those who are creating ways of producing energy with less of a carbon footprint will benefit.”

A clash of the old and new economies.

Shultz is 89 but thinking like a post-grad student with his future still ahead.