Make History, Arnold!

NY Times
Thomas Friedman
Oct. 21, 2006


Governors don't often get a chance to make big-time history, but Gov. Arnold Schwarzenegger of California has that opportunity now - if he's ready to get off the fence. With one move, Governor Schwarzenegger could make California America's hub for developing "green" clean-power technologies - which are going to be the growth industry of the 21st century - and do something that President Bush has only paid lip service to: really help to end America's oil addiction.

Do it, Arnold. C'mon, just do it.

Here's the basic story: This Nov. 7, Californians will be asked to vote yes or no on Proposition 87, a ballot initiative that would impose a higher extraction fee on oil pumped in California. (Up to now, oil companies in California have paid a very low extraction fee compared with those in other states - a rip-off they want to keep.) The new funds raised by Prop 87, explained The San Francisco Chronicle, "would be used to finance research and development of alternative fuels in universities; education campaigns; and subsidies to consumers who buy vehicles that use alternative fuels and businesses that produce and distribute alternative fuels. ... Oil companies would be taxed between 1.5 percent and 6 percent on oil production depending on the price of oil per barrel. The tax would end by 2017 or when the tax generates $4 billion, whichever occurs first."

Passage of Prop 87 would be huge. To begin with, it would be the perfect complement to the carbon reduction law that Arnold just signed. That law requires California to reduce its carbon dioxide emissions to 1990 levels by 2020. Prop 87, for its part, sets a goal of a 25 percent reduction in oil consumption in California in 10 years. Today, California consumes about 16 billion gallons of gasoline a year, so a 25 percent reduction, if realized, would put California well on its way to meeting its new carbon emissions goal.

But Prop 87, by also raising a $4 billion energy fund, and devoting most of it to nurturing new fuels and more fuel-efficient vehicles and buildings, would enable California to consistently enhance those companies, communities and schools now pioneering alternative energies. As anyone who has followed the alternative energy movement knows, one of its greatest weaknesses has been that Washington has constantly started and stopped subsidies for things like solar and wind power - so technologies have been innovated here but then turned into marketable products overseas.

By combining renewable-energy targets and a $4 billion fund to consistently support the start-up of companies to reach those targets in a free-market way, California would set a compelling example for other states - and maybe even for Washington.

The reason that Mr. Bush's call a year ago to end our oil addiction has been a total flop has to do with a struggle in his administration between foolish market worshipers led by Dick Cheney - who insist markets will take care of everything - and wiser, nuanced policy makers who understand that government's job is to set broad goals and standards, and then let the market reach them.

The best example of that is the 1999 Texas Renewable Portfolio Standard - a state law signed by whom? Gov. George W. Bush! The law required Texas electricity companies to buy a set amount of renewable power by 2009. This stimulated the Texas utilities marketplace to erect huge wind farms. Today, Texas is a real leader in wind energy and has sharply driven down the cost through innovation.

President Bush, meet Governor Bush.

Naturally, oil companies like Exxon Mobil - which just paid its outgoing chairman, Lee Raymond, $400,000,000 in his final year - are financing misleading ads to try to fool Californians into rejecting Prop 87. Polls show it's too close to call. And that brings us back to Arnold. He's on the fence. Even though he'll be re-elected in a landslide, he's not come out for Prop 87 - because he's against higher taxes, in principle. But he hasn't come out against it either. If he, and wife, Maria, openly support it, Prop 87 passes. It's that simple.

Bill Clinton said it best: "California is being given an opportunity ... to do something remarkable to save the planet, improve our national security and create the next generation of good jobs for the American people. That's what Prop 87 represents."

And Governor Schwarzenegger can determine whether or not that opportunity is seized. C'mon, Arnold, just do it. No one will remember you for sparing Exxon from a tax hike. And no one will forget you for spurring America to realize the dream of a clean, independent energy economy.