California’s clean energy initiatives and businesses are at a crossroads, pending the outcome of Proposition 23 on the November ballot. Should the proposition succeed, it would suspend California’s 2006 history-making climate bill, AB32, which mandates, among other things, a 25% reduction in the state’s greenhouse gas emissions by 2020.
As CEO of OriginOil, a California-based clean energy company, Riggs Eckelberry sees Prop. 23 as a strategical error on the part of the few large oil companies who are bankrolling the measure, and a potentially damaging blow to California’s stake as a clean energy state. The repercussions could travel way beyond California, should the proposition succeed.
“It’s quite ironic,” says Riggs, “because Big Oil itself knows that the days of petroleum are numbered. By the Petroleum Institute’s own estimate, there are perhaps 20 more ‘good’ years of supply. Two decades is not a long time for a trillion-dollar industry—and they know it.”
So if Big Oil sees the end of petroleum, and are in fact betting increasingly bigger chips on algal biofuels R&D, why would they throw a monkey wrench into what otherwise looks like progress? “It’s nothing more than a delaying tactic to maximize their profits until we run out of oil,” says Eckelberry.
“AB 32 is creating the market certainty needed for investment, research and development of inventions like ours, as well as jobs,” writes Riggs in an op-ed piece in the Los Angeles Daily News. “Since its passage, clean tech venture capital in California has skyrocketed, with investments of more than $6.5 billion. As the economy slowed between 2007 and 2008, total employment fell by 1 percent, but clean tech jobs continued to grow 5 percent. That’s something we need to reinforce, not cut back. But if we suspend AB 32, as Big Oil wants, all of that potential will be put on hold.”
Eckelberry feels that the Prop. 23 showdown will strongly affect California’s destiny to either lead or follow in the clean energy movement. “Until AB 32 is fully implemented, no one is purchasing the cleaner fuels here. As a result, companies like mine, are doing research in state, but producing the fuels where consumers are located. My own company, OriginOil, has found its first major customer… in Australia! So they get the jobs and the cleaner air. That sends a message.”
For those of us who don’t live in California, why is prop 23 important to the algae industry?
The algae industry has a lot of its major ventures in California. We’ve got Sapphire and Solazyme, Scripps, Aurora Algae…probably the greatest number of algae’s significant players are in California. The health of the algae industry is linked to California’s health as a state. Those two go hand in hand.
A lot of bioenergy funding comes out of California, and VCs are very sensitive to local conditions. It’s a big deal for them that their own environment is either pro or against a particular thing. That’s true for high tech, and for alternative energy as well. It’s got to work in their own back yard.
Basically the fact that California is a technology probation center for algae, and for green technologies at a larger level, means that it’s got a duty to walk the walk and do what it’s preaching to others. Otherwise California will continue to lose businesses. We already saw Aurora locate its field operations in Australia. We’ve got to grapple with the fact that while significant development is being done in California, a lot of the production is getting exported. We don’t want to make things worse.
What are the key points of Prop 23?
Prop 23 is basically suspending AB32 until certain economic conditions are met, ones that have not actually been seen in decades. There are unusually strong economic requirements to reinstating AB32, especially when we are going through an era where high unemployment numbers are baked into the overall economy.
As I said in my op-ed, employment figures overall in California have been going down, but clean tech jobs have been going up. So why would we hit at the rising trend? That seems wrong headed.
So then why was Prop 23 created and what is the agenda of the group behind it?
It’s not clear, because one of the funny things is that, of course, Big Oil is in algae, so I don’t think all of the oil people were behind it. I don’t think all of the oil companies got into a smoky room to put this together.
I think that part of the oil industry wants to buy time. The Petroleum Institute back in 2007 estimated that the oil industry has twenty years of good growth ahead of it, using petroleum. And it recognized it had to look for an alternative. I think that basically the oil industry is playing defense, making sure that it defangs any initiative that tends to harm it.
How do you see the algal industry affected, both in and outside of California, if Prop 23 passes?
I think that Prop 23, if passed, will actually affect more mature green industries in California. I think it will be a heavy weight on solar and wind, and waste-to-energy far more than algae, because we’re much earlier in the game. We’re not trying to get huge loan guarantees and so forth.
I think it sets a poor standard, it’s a step backwards, and ultimately we’ll likely see some counter moves coming out of the legislature or state agencies to deal with it. But AB32 is popular and is supported in California. And I think that Prop 23 would be psychologically very damaging to the eco movement and this industry.
We’re seeing a groundswell for algae adoption right now, based on fossil fuel polluters starting to do something about their CO2 emissions. Perhaps they are being bullied into it by government, or perhaps they’re doing it because they feel that, if they don’t do some kind of CO2 capture now themselves, they’ll be subject to more stringent regulations down the road.
So there is a lot of adoption of algae for biocapture and bioremediation. I don’t think that that trend is affected by any regulation for the simple fact that it is being driven by a fundamental need for these emitters to do something about CO2 almost as a preventive measure in order to look good. And it’s much easier to put in an algae production plant for $50 million than to build a $2 billion geosequestration setup. And so fortunately there’s a move toward algae that’s really not driven by regulation.
If 23 is defeated, what do you see as the fallout?
I think it will send a message that California is committed to this green path. But it’s not victory. It’s just a battle in the war. I see it as a repudiation of policies that would take us backwards. And I think it will also lead to other jurisdictions passing similar state-level initiatives, given that Washington right now, and for the foreseeable future, is in gridlock.