November 1, 2008

California’s GHG plan gives power heaviest load

Steven F. Greenwald and Jeffrey P. Gray

New opportunities

Notwithstanding the many challenges confronting the power generation sector, the implementation of AB 32 should provide new opportunities for growth in the industry. Increased renewable procurement obligations and the need to firm intermittent resources is good news to developers of both renewable and fossil-fueled generation. The AB 32 imperative to increase energy efficiency is already encouraging the development of new technologies and green building techniques. It has been reported that more than $2.8 billion of venture capital funding was invested in green energy technologies in the third quarter of 2008. That’s more than double the investment made in the second quarter and nearly triple the first quarter number.

The challenge: Find the right balance

AB 32 allows the state only eight years (2012 to 2020) to reduce projected GHG emissions by roughly 30% from forecasted 2020 levels, or 168 million metric tons of CO ₂. During this period, the electricity sector will be required to significantly reduce its GHG footprint while ensuring that sufficient generating resources are available to support the efforts of other sectors to reduce emissions.

The ability to meet these two conflicting goals will depend on the power industry’s creativity and innovation. The gauntlet has been thrown down. Stay tuned to see who picks it up.

—Steven F. Greenwald (stevegreenwald@dwt.com) leads Davis Wright Tremaine's Energy Practice Group. Jeffrey P. Gray (jeffgray@dwt.com) is a partner in the firm's Energy Practice Group.