From Golden to Green - Encounter Books

From Golden to Green

Inside California's Eco-Fundamentalism
By Rupert Darwall | October 18, 2017

German energy policies, French labor regulation, Italian public debts, and a Scandinavian cost of living premium: Subtract Silicon Valley and Hollywood, and America’s most populous state has distinctly European features. California had been a pioneer in the preservationist movement dating back to John Muir and the founding of the Sierra Club in 1892, and for the better part of a century California had it both ways. Preservation of the Yosemite Valley, the Sierra Nevada, stretches of the coastline, and its redwoods did not put a brake on the state’s booming economy.

An oil-well blowout six miles off the coast of Santa Barbara in 1969 began to change the balance between growth and environmental protection. Although the long-term environmental impacts of the spill were minimal, it led to the creation of the Californian Coastal Commission and an indefinite moratorium on offshore drilling within three miles of the coast. Topography also played a role in the development of Californian eco-fundamentalism. Geography and weather patterns give Southern California its sunny climate and some of America’s worst urban air quality. Cold ocean currents and nearby mountains lead to frequent temperature inversions, when warm air traps cooler—often polluted—air. Meeting the standards prescribed in the 1970 Clean Air Act presented California with insuperable problems: Pollution from trucks and autos means that the big cities of Southern California could be completely de-industrialized and still suffer from poor air quality.

Subtract Silicon Valley and Hollywood, and America's most populous state has distinctly European features

Something else was in the air in 1975, when Jerry Brown succeeded Ronald Reagan as governor. Reagan had supported economic growth and conservation, backing tougher auto emission standards, blocking development around Lake Tahoe and extending state parks. Brown, in the words of Manhattan Institute senior fellow Steven Malanga, proselytized radical antigrowth environmentalism drawn from ecological thinkers such as Norwegian philosopher Arne Næss and the author of Small Is Beautiful, Fritz Schumacher. Næss, a member of the resistance during the Nazi occupation of Norway, characterized conservation programs as “shallow ecology,” proposing instead a deep-ecology rollback of industrial development. Like Næss, Schumacher had been an anti-Nazi, fleeing Germany for Britain, where his reputation (and the royalties from his book of Buddhist economics, as he referred to Small Is Beautiful) disinfected the organic Soil Association movement of its founders’ pro-Nazi sympathies.

Californian universities became seminaries of green ideologies raising up a secular clerisy, to borrow Joel Kotkin’s term, to propagate their values through the media and into the governing bureaucracies of the state. From 1965, Herbert Marcuse was teaching the Frankfurt School’s critical theory at the University of California, San Diego; Paul Ehrlich, author of the 1968 bestseller The Population Bomb, which predicted millions of deaths from mass starvation, had been teaching biology at Stanford since 1959; and Garret Hardin was teaching his antihuman population theories at the University of California, Santa Barbara throughout the 1960s. In 1969, Friends of the Earth was founded in San Francisco by the former executive director of the Sierra Club and vocal advocate of population control, David Brower, with, as we’ve already seen, oil-industry funding.

All this helped bring about a profound transformation in Californian politics. According to Kotkin in his 2014 book The New Class Conflict, the old plutocracy—notably energy, manufacturing, mass agriculture, and construction—generally supported the economic advancement of the classes below them. The consensus across the political spectrum in America that growth was good remained universal at least until the late 1960s.

For all its many environmental and social shortcomings, the old economic regime emphasized growth and upward mobility. In contrast the new economic order focuses more on the notion of “sustainability”—so reflective of the feudal worldview—over rapid economic expansion.

In California, it is being replaced by a new, deeply stratified social order. As Kotkin puts it, the oligarchs of a dematerialized economy who made billions out of IT, finance and entertainment have shaped a new kind of post-industrial economy. Its lighter environmental footprint becomes a license to deny those less well adapted or unfortunate a share in its riches and its lifestyle.

Killing the American Dream is necessary for the success of the Europeanization project

Antipollution regulation accelerated California’s deindustrialization. Aerospace manufacturing shifted to states with lower energy costs and right-to-work laws. In the ten years to 2015, Southern California’s industrial base shed 60 percent of its workforce, from 900,000 to 364,000.6 Environmental progress is socially regressive in its application, Kotkin argues. California has America’s largest number of billionaires (111) and its highest poverty rate (23 percent) on the Supplemental Poverty Measure. With roughly 12 percent of America’s population, California accounts for roughly one-third of its welfare recipients. The clerisy’s no-growth planning policies increase downward mobility, particularly among Latinos. Shockingly, native-born Latinos have shorter life spans than their parents. Without broad-based economic growth, large parts of an emergent middle class risk becoming a permanent class of low-wage proletarians, Kotkin suggests. Technology replaces religious faith or civic virtue to provide a secular justification for increased social stratification in what Kotkin dubs “high-tech feudalism.” The proletarianization of the American middle class is not an unfortunate or unwelcome by-product of green ideas. Killing the American Dream is necessary for the success of the Europeanization project because ever-rising material consumption—especially the burning of hydrocarbons—is the clerisy’s biggest prohibition.

California’s social stratification has a geographic dimension. The elites that run the state live within five miles of the coast, where air conditioning is a renewable resource provided by the cool waters of the California current. Rather like apartheid-era South African town- ships, the impoverished lower-middle class live out of sight and out of mind a hundred miles away, in the sweltering interior. When it comes to electricity bills, it pays to be wealthy. According to Kotkin, the average summer electrical bill in rich, liberal Marin County was $250 a month, while in poorer, hotter Madera in the San Joaquin Valley, the average bill was twice as high. Google chairman Eric Schmidt says people in Silicon Valley don’t talk about the concerns of the 99 percent because a lot of them are immune to those concerns. “We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Schmidt acknowledged.

California's path to energy ruin has been three decades in the making

Schmidt’s and the Valley’s indifference to the majority of Californians was manifested in their efforts to raise electricity costs by imposing wind and solar energy mandates and then defeating the 2010 Prop 23 ballot initiative to partially reverse them.

California’s path to energy ruin has been three decades in the making. Thanks in large part to green anti-growth ideology, hardly any new generating capacity had been built in the last two decades of the twentieth century. Between 1990 and 1999, California’s generation capacity decreased by two percent while consumption increased by eleven percent. Aging generators, a diminishing capacity margin and aggressive environmental regulation set the stage for California’s 2000-01 energy crisis.

Towards the end of 2000, a significant amount of generating capacity was undergoing maintenance. Low water levels in the Pacific North West reduced hydroelectric output and several gas-fired plants had used up their pollution credits and would be liable to fines if used. Preserving grid stability therefore necessitated rotating blackouts. The capacity squeeze also caused a huge price spike: By December 2000, wholesale prices were eleven times higher than a year earlier. To make matters worse, the state imposed retail price caps so electrical utilities couldn’t recover higher wholesale costs. Between June 2000 and April 2001, when it filed for Chapter 11 bankruptcy protection, the Pacific Gas and Electric Company incurred $9bn of costs that the state prevented it from recovering.

Even so, California carried on down the path of energy incoherence. Between 2002 and 2014, coal, natural gas and nuclear power station capacity – the most reliable generating technologies – fell by 8.5 percent whilst hydro capacity nearly halved. Overall, the proportion of non-weather dependent generating capacity fell from 95 percent of system capacity in 2002 to 80 percent in 2014. Over the same period, total generating capacity shrank nearly nine percent but demand rose 27 percent. To keep the air con on, California more than doubled the electricity it imported from neighboring states, in 2014, accounting for one-third of Californian demand.

Politicians in Sacramento competed with each other to save the planet from global warming – and enrich wind and solar magnates. In 2002, the state legislature passed the California Renewable Portfolio Standard Program, setting a twenty percent renewables target by 2017. In 2003, it was brought forward to 2010 and put into law in 2006. In 2005, Governor Schwarzenegger proposed raising the target to thirty-three percent by 2020 and issued an executive order setting three greenhouse gas reduction targets: Back to 2000 levels by 2010 – a target that was only met thanks to the 2008 recession; to 1990 levels by 2020; and eighty percent below 1990 by 2050. Silent on the means of meeting the targets, Schwarzenegger wasn’t on who would benefit: ‘California companies investing in these technologies are well-positioned to profit from this demand.’ The targets became law with Assembly Bill 32, the California Global Warming Solutions Act of 2006.

As the damage caused by AB32 became better understood, Spring 2010 saw the launch of a campaign to get the near half a million signatures for a ballot initiative, to suspend AB32. The initiative succeeded and became Prop 23, but was defeated that November by 61.5 percent to 38.5 percent. Flushed with success, in 2011 the legislature wrote Schwarzenegger’s thirty-three percent target into law, by which time Jerry Brown was back in the governor’s mansion for a third term. The definition perversely excluded nuclear power or large hydro facilities. Like Germany, global warming is not the objective but an excuse to convert the grid to wind and solar. In January 2015, Brown upped the ante with the goal of a 50 percent renewables target by 2030. It was, the newly inaugurated fourth term governor declared,

exactly the sort of challenge at which California excels. This is exciting, it is bold and it is absolutely necessary if we are to have any chance of stopping potentially catastrophic changes to our climate system.

Zero-emission nuclear power wasn’t mentioned. Too exciting, too bold, too logical.

The crushing of Prop 23 was a demonstration of the raw political power of environmentalism. Governor Schwarzenegger had slammed arguments made by Texan oil refiners that suspending AB 32 would create jobs as like ‘Eva Braun writing a kosher cookbook.’ The Californian establishment was mobilized. George Shultz was co-chairman of pro-AB32 Californians for Clean Energy and Jobs group. Conceding that some companies were worried about the cost of AB32, ‘the new regulations will boost the state’s economy by creating “clean-tech jobs,”’ claimed Ronald Reagan’s former Secretary of State and Richard Nixon’s director of Office of Management and Budget.

What AB32 supporters lacked in intellectual edge, they more than made up with an overwhelming money advantage. They cried foul about out-of-state oil money when the real story was the money pouring in behind AB32 to defeat Prop 32. The Rockefeller Family Fund chipped in $300,000. In a display of gratitude to the legislators who had bankrupted it, Pacific Gas & Electric Company contributed half a million dollars. The usual suspects were unusually generous: the National Wildlife Federation ($3m); the National Resources Defense Council ($1.9m); the Sierra Club ($1.7m); the League of Conservation Voters ($1.3m); the Environmental Defense Fund ($1.1m); Nature Conservancy ($800,000); the Union of Concerned Scientists ($113,005) and the National Audubon Society ($100,000). The big bucks in the defeat of Prop 23 came from eBay and TechNet, a tech lobbying group including Apple, Google (Wendy Schmidt, Eric’s wife, gave $500,000), Yahoo, Silicon Valley venture capitalist John Doerr ($2.1m), and billionaire Vinod Kholsa, formerly of Sun Microsystems ($1.0m). Biggest anti-Prop 23 donor was hedge fund manager Tom Steyer ($5m), who co-chaired Californians for Clean Energy and Jobs along with Shultz.

These donor numbers disguise the upstream source of much of the anti-Prop 23 NGO funding. A 2013 report by the Columbia School of Journalism notes a sharp rise in environmental funding from a handful of primarily West Coast funders. This followed publication in 2007 of a strategy report ‘Design to Win’ commissioned by six wealthy foundations.Written by researchers from California Environmental Associates and the Stockholm Environment Institute, the report argued that solving global warming required ‘a makeover of the global economy that is unprecedented in both scope and speed.’ Philanthropy could play a pivotal role in bringing this about, but ‘donors and foundations must be strategic and choose interventions with the most potential to set the world on a low-carbon course.

The report’s message was heeded. In 2008 three of the wealthiest foundations in America—the William and Flora Hewlett, David and Lucile Packard and McKnight foundations—committed more than $1.1bn to launch ClimateWorks. Hewlett alone pledged $500m, making it the single largest grant in the foundation’s history. ClimateWorks—‘our mission is to mobilize philanthropy to solve the climate crisis,’ according to its Twitter bio—directs the flow of foundation and hedge fund dollars to maximize their impact. Foundation dollars donated to ClimateWorks is re-bundled and transferred to the secretive Energy Foundation, which in turn serves as a major source of grants to American NGOs. The mixing and aggregation of climate dollars also has the effect of hiding the upstream source of the cash originating, in the words of the Columbia Journalism School, from a ‘small cadre of wealthy hedge fund owners and foundations headquartered primarily in California.’

The strategy in the ‘Design to Win’ report went beyond California and the US. ‘The global community must overcome the collective action problems that have hobbled international climate agreements,’ the report’s authors argued. ‘A cap on carbon output—and an accompanying market for emissions permits—will prompt a sea change that washes over the entire global economy.’

This piece has been adapted from Rupert Darwall’s new book, Green Tyranny: Exposing the Totalitarian Roots of the Climate Industrial Complex Original content on EncounterBooks.com is available for syndication. Request permission here.
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Rupert Darwall is strategy consultant and policy analyst. He read economics and history at Cambridge University and subsequently worked in finance as an investment analyst and in corporate finance before becoming a special adviser to the Chancellor of the Exchequer.

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