California's Resource Colonialism, Keeping the Good in the state, and Pushing the Bad out

WSJ.com has an opinion article by Max Schulz which does a good job of summarizing the California Energy Policy.  This article reminds me of those people who pursue a Green strategy to look good versus an effective Green solution.

Max starts with the good.

"When you look at the globe, California is a little spot on that globe," Gov. Arnold Schwarzenegger said recently at Yale University's Climate Change Conference. "But when it comes to our power of influence, it is the equivalent of a whole continent."

Perhaps. As an exercise of this influence, Mr. Schwarzenegger has attempted to push climate-change policy forward, signing the Global Warming Solutions Act. It commits the state to reducing greenhouse-gas emissions to 1990 levels – roughly 25% below today's – and all but eliminating them by 2050.

"California has the ideas of Athens and the power of Sparta," he said in his state of the state address last year. "Not only can we lead California into the future; we can show the nation and the world how to get there."

His words are in keeping with the state's self-perception. Politicians, business titans, academics and environmental activists proudly point to four decades of environmentally conscious public policy – while maintaining a dynamic economy, arguably the eighth-largest on the planet, with a gross state product of more than $1.6 trillion.

And, then starts to set the reality of the situation.

In truth, the state's energy leadership is a mirage. Decades of environmental policies have made it heavily dependent on other states for power; generated crippling costs; and left the state vulnerable to periodic electricity shortages. Its economic growth has occurred not because of, but despite, those policies.

The blunt secret is this: California now imports lots of energy from neighboring states to make up for having too few power plants. Up to 20% of the state's power comes from coal-burning plants in Nevada, New Mexico, Utah, Colorado and Montana. Another significant portion comes from large-scale hydropower in Oregon, Washington State and the Hoover Dam near Las Vegas.

"California practices a sort of energy colonialism," says James Lucier of Capital Alpha Partners, a Washington, D.C.-area investment group. "They leave those states to deal with the resulting pollution."

California's proud claim to have kept per-capita energy consumption flat while growing its economy is less impressive than it seems. The state has some of the highest energy prices in the country – nearly twice the national average – largely because of regulations and government mandates to use expensive renewable sources of power. As a result, heavy manufacturing and other energy-intensive industries have been fleeing the Golden State in droves.

And closes with

Californians may feel good about their environmental consciousness. But someone needs to build power plants and oil refineries to fuel their economy. Someone needs to manufacture the cars they drive, the airplanes they fly, the chemicals and resins and paints and plastics that make their lives comfortable.

[California's Energy Colonialism]

Corbis

The Rancho Seco nuclear power plant could generate 900 megwatts of electricity. It was shut down and converted to solar power, and today generates four megawatts.

Companies can pursue this same California Colonialism strategy by outsourcing their data center operations and getting the energy consumption off of their books. I wouldn't be surprised if the outsourcing companies like EDS, IBM, and HP have figured out a way to leverage this into their presentations.