Small Business Takes Active Role in Supporting California’s Global Warming Legislation, AB 32: Signals National Implications

On November 1, 2006, the Environmental and Energy Study Institute (EESI) held a Congressional briefing on the active role small business took in supporting California’s first-of-a-kind greenhouse gas legislation, AB 32, and why this could have significant implications for climate legislation nationally. Small business plays a significant role in the economy, accounting for over half (51 percent) of the nation’s private sector output and 47 percent of all sales. Small business is by far the largest creator of new jobs. Small business in the aggregate is “big business.”

Green entrepreneurs and small businesses played a pivotal and unprecedented role in the enactment of the California Global Warming Solutions Act (AB 32). For the first time the debate was cast not in terms of economics versus the environment, but in terms of mainly established large businesses that opposed the legislation versus mainly small and new businesses that supported it. Business supporters ranged from firms engaged in energy efficiency and renewable energy technologies and green building design and construction to socially responsible investment firms and venture capitalists.

Small business plays an important role in the use of energy, consuming 48 percent of all electricity and 39 percent of all natural gas used for commercial and industrial purposes in the United States. This affords great opportunities for small businesses to accrue benefits from carbon-cutting energy efficient technologies. Just as small business plays a major role in the economy and its energy use, small business also plays an important role in generating new technologies. This innovation is critical in providing solutions to climate change.

The California Global Warming Solutions Act of 2006, AB 32, authored by Assembly Speaker Fabian Núñez (D-46th) and Assemblywoman Fran Pavley (D-41st), was signed into law by Gov. Schwarzenegger on September 27, 2006. The bill established a greenhouse gas (GHG) emissions cap for the electric power, industrial, and commercial sectors; instituted a schedule for emissions reductions; and created a program to monitor and enforce that schedule. The initial goal of the bill was to reduce California GHG emissions to 1990 levels by 2020.