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Bill Gates, Google's Brin Fund Fight for California Carbon Law
2010-10-25 04:03:00.0 GMT
By Mark Chediak and Simon Lomax
Oct. 25 (Bloomberg) -- Clean-energy investors and
environmentalists in California raised $11.9 million in the past
two weeks to snuff out a challenge to the state's global-warming
laws backed by oil refiners Tesoro Corp. and Valero Energy Corp.
Voters in the most-populous U.S. state will decide in eight
days on Proposition 23, a proposal to suspend a state law
restricting greenhouse-gas emissions until California's
unemployment rate falls to at least 5.5 percent. The rate in
September was 12.4 percent, third-highest after Nevada and
Michigan.
Microsoft Corp. founder Bill Gates, Google co-founder
Sergey Brin and James Cameron, director of the world's top-
grossing film "Avatar," have donated to the campaign in the
past two weeks, according to state records. If passed, the
measure would undermine the nation's largest solar market and
threaten $9 billion in venture capital investments, according to
analysts, investors and renewable-energy companies.
It would have "a significantly negative impact on the
valuation of solar energy stocks," said Ramesh Misra, a solar
analyst with New York-based Brigantine Advisors.
First Solar Inc., the world's biggest maker of solar panel
modules, SunPower Corp., the second-biggest U.S. supplier of
solar modules, and Yingli Green Energy Holding Co., China's
second-largest maker of solar panels, may fall if the measure
passes, Misra said.
Shares of First Solar, based in Tempe, Arizona, have risen
7.5 percent so far this year. SunPower, based in San Jose,
California, has fallen 43.3 percent. Yingli Green Energy has
dropped 26.3 percent.
Headed for Defeat?
Groups opposed to the ballot initiative have taken in more
than $30 million to sway voters with radio, television and print
advertising, out-raising supporters of the measure by almost
three to one, according to state records.
The proposition would delay enforcement of California's
Global Warming Solutions Act, which was signed into law by
Governor Arnold Schwarzenegger in 2006 and requires the state to
cut output of greenhouse gases linked to climate change to their
1990 levels by 2020. The carbon law would create a market for
carbon dioxide pollution permits and require utilities to buy
almost a third of their electricity from renewable sources such
as solar panels.
The proposition looks likely to be defeated in part due to
the well-funded challengers, as well as the public's displeasure
with oil companies after the BP Plc spill this year in the Gulf
of Mexico, said Robert Stern, president of the Center for
Governmental Studies in Los Angeles.
"There has been a lot of opposition to this," Stern said.
Fading Support
To pass, the proposition requires a majority vote. An Oct.
20 Public Policy Institute of California poll found 48 percent
of likely voters oppose Proposition 23, and 37 percent support
it. That compares with 42 percent who opposed it and 43 percent
who supported the initiative in a poll released Sept. 29 by the
San Francisco-based institute.
Tesoro, Valero, and Flint Hills Resources LLC, a refining
subsidiary of Wichita, Kansas-based Koch Industries Inc., have
raised more than two-thirds of the $10.6 million that has
financed support of the proposition. Backers say the measure is
needed to prevent job losses and will give California's economy
time to recover so that it can better absorb the cost of climate
regulations.
'Common-Sense Approach'
Proposition 23 stipulates that the law for cutting
greenhouse gases would not take effect until California's
unemployment rate falls to at least 5.5 percent for four
consecutive quarters. Since 1970, there have been three periods
when the state's jobless rate has fallen that low for that long,
according to an analysis of the ballot measure by the state's
Legislative Analyst's Office, a non-partisan agency that works
for the legislature.
Valero, based in San Antonio, has 1,600 employees in the
state and remains a "dedicated and enthusiastic supporter" of
the measure, Bill Day, a Valero spokesman, said in a telephone
interview. "We still think it is a common-sense approach to
some of the economic difficulties California faces," Day said.
Tesoro, also based in San Antonio, "firmly supports" the
proposition, Lynn Westfall, a Tesoro spokesman, said in an e-
mailed statement. Its passage "would be a major milestone in
the recovery of the California economy and improve its dismal
unemployment rate."
Koch Industries did not respond to requests for comment.
On Oct. 19, 68 investors managing $415 billion in assets,
including venture capital firms Kleiner Perkins Caufield & Byers
and VantagePoint Venture Partners, issued a statement opposing
the measure. Opponents say it may trigger a backlash against
government support for alternative-energy sources across the
rest of the U.S.
'Test of Will'
"I know it will have a national effect," Jim Watson, a
San Francisco-based venture capitalist who serves on the
executive committee of the "No on 23" campaign, said in an
interview in Washington. "It really is a test of the people's
will," said Watson, the managing general partner of CMEA
Capital, which has $1.2 billion invested in energy, information
technology and life sciences companies, according to its
website.
Gates's contribution was a private one and not from the
Bill and Melinda Gates Foundation, said John Pinette, a
spokesman for Gates. Google declined to comment on Brin's
contribution. Cameron declined to comment on his donation, said
Steven Maviglio, a spokesman for a committee that is campaigning
to defeat the proposition.
Still Confident
Backers of the ballot initiative are "quite confident" it
will prevail on election day, Anita Mangels, a spokeswoman for
the "Yes on 23" committee, said in a telephone interview.
"The volume of venture-capital dollars" that have been
devoted to defeating Proposition 23 are meant to "artificially
prop up" investments in "clean-tech" companies, Mangels said.
Venture capital firms have invested $9 billion in clean-
technology companies in the state since 2005, said Martin Lagod,
co-founder and managing director of Firelake Capital Management
LLC in Palo Alto, California and an opponent of the ballot
measure.
Most of that money was invested on the assumption that
California would enforce its greenhouse gas limits, he said.
For Related News and Information:
Top environment stories: GREEN <GO>
Stories about U.S. and climate: TNI US CLIMATE <GO>
Global emissions data: EMIS <GO>
--Editors: Charles Siler, Susan Warren.
To contact the reporters on this story:
Mark Chediak in San Francisco at +1-415-617-7233 or
mchediak@bloomberg.net;
Simon Lomax in Washington D.C. at +1-202-654-4305 or
slomax@bloomberg.net.
To contact the editor responsible for this story:
Susan Warren at +1-214-954-9455 or susanwarren@bloomberg.net.
