California's legislature Thursday put the final exclamation point on the state's far-reaching move establishing the toughest standards in the nation in an attempt to turn back the clock on greenhouse gas (GHG), or global warming, emissions, passing mandatory reporting and emission limits for electric generation plants, refineries and other major industries (AB 32), along with a ban on adding any new power generation or supply contracts tied to traditional coal-fired power generation (SB 1368).

As the governor and state lawmakers did after striking a deal Wednesday, the major private sector utilities, independent power plant operators and environmentalists hailed the work of the state legislature, which passed the two bills strictly along partisan lines with most of the minority Republican lawmakers voting against the measures because they believe global warming needs to be dealt with nationally, and the state approach may drive business out of California, the world's sixth biggest economy. Legal challenges are expected to the legislation, which Gov. Arnold Schwarzenegger has indicated he would sign -- at least in the case of AB 32.

The Assembly voted 46-31 for Speaker Fabian Nunez's AB 32; the Senate concurred on SB 1368 after it cleared the Assembly late Wednesday night.

The two largest private-sector utilities in the state, Pacific Gas and Electric Co. and Southern California Edison Co., issued written statements of support for the legislation, along with the state's major, albeit Chapter 11 bankruptcy-mired, independent power plant owner, Calpine Corp.

"We believe that climate change is the most critical environmental challenge of our age, with potentially severe impacts on California," PG&E said in its prepared statement. Edison was more cautious saying that it "supports the goal of AB 32 to address the important issue of climate change, but we remain concerned about the potential costs, particularly for our customers." Calpine CEO Robert May called the legislation "a bold step toward fostering continued development of clean, reliable and low-cost power generation sources."

Following the final concurrence of the full Assembly, Speaker Nunez issued a statement saying that California is a "top emitter of greenhouse gases in the world, [but] today we are taking a stand to curb this crisis. We have the will, ability and solutions to slow global warming."

SB 1368, authored by the top leader in the state Senate, Don Perata, with amendments establishes a GHG performance standard for all baseload generation of load-serving entities at a rate of emission of GHG that is no higher than the rate or emissions of a combined-cycle natural gas-fired generation plant.

In saying it supported the measure, PG&E officials noted that the new law directs the California Public Utilities Commission (CPUC) to implement and enforce the GHG emission standard for private-sector utilities, community choice aggregators and energy service providers, and the California Energy Commission (CEC) to do the same for public-sector utilities, such as the Los Angeles Department of Water and Power (LADWP).

"We are giving the gift of a more stable environment to our children," Nunez said. "And we are creating a new economic sector for the development of clean technologies that have the potential to add to California's strong economy"

Setting the stage for the nation's first comprehensive limits on GHG emissions, California lawmakers and Schwarzenegger reached a last-minute agreement late Wednesday, allowing passage of the state Global Warming Solutions Act of 2006 (AB 32). A nagging impasse between major business and environmental interests was resolved with amendments to provide more flexibility for future governors, mandatory GHG emissions reporting, and limitations for all major sources, including the largest source, electric generation plants.

Following the deal, Schwarzenegger's press office immediately released a prepared statement, calling the agreement "historic" and paving the way for the lawmakers to send him a bill he could sign into law. "We can now move forward with developing a market-based system that makes California a world leader in the effort to reduce carbon emissions," he said in the statement.

Schwarzenegger's Democratic opponent for governor in the November election, state Treasurer Phil Angelides, issued a political statement applauding the legislature and environmental leaders for passage of the bill despite the governor's purported attempts to "gut" AB 32. "Unlike Gov. Schwarzenegger who tried to undermine this legislation, California can count on me as governor to enforce these greenhouse gas emissions caps and not work to sabotage them."

AB 32's author, Nunez, a Democrat who supports Schwarzenegger's gubernatorial opponent, called the measure "the first bold step to create technology and regulation needed to reduce carbon emissions and slow global warming." Nunez noted the governor's commitment to sign the measure into law, which was not a sure bet earlier in the week and month.

Although lacking specifics on what is in the final bill, Schwarzenegger said that throughout the legislative give-and-take process his primary concern was that a bill pass that "provided the flexibility to address unforeseen circumstances. AB 32 will ensure that the state can make adjustments throughout its implementation."

Environmental supporters of the measure, the Natural Resources Defense Council and Environmental Defense, lauded the legislature and predicted both bills would go to the governor.

"This bill sets the stage for Gov. Schwarzenegger to make history and get America's global warming policy on track with the rest of the world," said Jim Marston, a senior attorney from Environmental Defense. "California's action today is a watershed moment in the fight against global warming.

Earlier in the evening, Speaker Nunez's office outlined the bills significant aspects as follows, highlighting the fact that the principle enforcer of the new law will be the California Air Resources Board (CARB):

In its prepared statement, Edison said it looked forward to working with CARB, the CPUC and CEC "to implement the ambitious goals set by AB 32 in as cost-effective a manner as possible to encourage technological innovation and enable us to continue to provide a reliable and affordable supply of energy."

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