A Whole New Ball Game

Byron Kennard

The just-passed California Global Warming Solutions Act, which imposes a cap on all greenhouse gas emissions, is the toughest legislation in the United States to tackle global warming. It is truly historic.

What's also historic is that, for the first time, the debate was cast not in terms of business versus the environment but of clean and efficient companies versus their dirty and inefficient competitors.

This change in the debate may be as significant as the tough new law. As Bob Epstein, co-founder of Environmental Entrepreneurs, describes it, "This is the tipping point in the country's climate-change debate."

Elliot Hoffman, CEO of the aptly named New Voice of Business, located in San Francisco, put it this way: "The real debate is between old, tired industrial-era business thinking and new, creative and future-looking business thinking."

This "real debate" was largely secured by stressing the role of entrepreneurs (mostly small business people) in providing clean technology innovations. Equally important was the stress on the new jobs created (mostly by fast-growing small businesses) in the transition to a clean economy.

In this connection, it's highly consequential that prominent small business leaders advocated the legislation. In fact, Small Business California was the first generic statewide business organization to publicly support it. In announcing his support, Scott Hauge, the group's President, correctly observed, "This is the first time that environmentalists and small business have teamed up to find solutions to global warming.”

Hauge claims that the law is going to create a huge new industry by providing opportunities for entrepreneurs to develop technologies for meeting the demand created by the cap. "Small business will therefore be creating thousands of jobs,” he adds, "something they do best.”

Other business voices heard in support of the legislation include that of the San Francisco Chamber of Commerce, whose membership is eighty percent small business people.

What explains the shift in the debate?

California, of course, is fortunate to possess a thriving environmental business sector, providing green versions of virtually everything under the sun. These largely small firms show how products and technologies can be profitable as well as green. What's more, because their operations are small and new, these innovators and entrepreneurs are not captives of the old industrial order; they are its critics. Like environmentalists, they object to public policies and regulations that unfairly favor (and subsidize) dirtier old businesses and that act as barriers to innovation.

This message sells in the halls of the legislature.

According to Bob Epstein, Assembly Member Pavley (the legislation's co-author) stated that the biggest political shift in the debate occurred when members of the California venture capital community testified in support of the legislation, turning - in effect - the bill into a business debate rather than business versus the environment.

Played by these rules, this truly is a whole new ballgame.