The Business Guide to the Low Carbon Economy

Reading time: 60 minutes
15 October 2008

In California, the low carbon economy has been galvanized by the Global Warming Solutions Act, AB32, signed into law by Governor Schwarzenegger in 2006, and making California the first state to set an economy-wide cap on emissions. The world's eighth-largest economy11 has thus signaled that it is serious about addressing this problem. AB32 mandates real, cost-effective reductions in GHG emissions and aims to shift economic activity away from fossil fuels and towards very efficient use of low carbon and carbon-free energy sources. Implementation of AB32 will:

  • Send a clear market signal, encouraging market development, innovation, entrepreneurism and investment in low carbon technologies, products and services
  • Increase energy efficiency and resulting cost savings to California consumers and businesses
  • Catalyze early actions by California businesses, giving them a competitive advantage as other state and national economies look to reduce their emissions
  • Serve as a model for other regional, state and federal initiatives, thus maintaining California's reputation as a leader

Of course, this is not new territory for California, which has a history of leadership in smart environmental solutions. The state's building and appliance efficiency standards have avoided the need to build 15 new large power plants and saved consumers more than $56 billion in electricity and natural gas costs since 1978. Such energy efficiency programs will continue to be important and cost-effective parts of AB32's implementation and a source of economic opportunity. For example, California's building and appliance efficiency standards are expected to produce at least another $48 billion in energy savings by 2020.

An undertaking of this scale requires every individual, public sector entity and private sector business to make urgent and substantial progress in reducing their emissions. Businesses can take action now by:

  • Anticipating rising fuel and energy prices by implementing a comprehensive program to reduce energy and fuel use
  • Identifying sources of GHG emissions and taking steps to reduce those emissions
  • Engaging and participating in the AB32 implementation process
  • Strategically responding to requirements which will either affect them, their customers or suppliers
  • Proactively addressing consumer and investor interest in and demand for transparency and climate-friendly products and services

Businesses that understand current and upcoming policy and manage and reduce their carbon emissions will only stand to gain in the transition to a low carbon economy. 

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