It’s not clear, however, how many projects will be affected. Some could still see enough demand because of an earlier renewable electricity standard that requires public utilities to get 20 percent of their electricity from renewable sources as of this year. There’s also a good chance that a 33-percent requirement will be enacted separately by the state legislature, says Michael Wara, a law professor at Stanford University Law School. He says that California voters have consistently voted in favor of provisions that directly support renewable energy, even when they don’t support “more abstract” rules such as limits on carbon-dioxide emissions.
It’s unclear what impact suspending the two other major AB 32-related rules and regulations will have. Stopping the cap-and-trade program and the low-carbon fuel standard will reduce incentives for startups offering low-carbon energy and biofuels technologies. But some venture capitalists say that the companies they have invested in were founded on the presumption that there would be no such cap-and-trade system, and so their business plans don’t depend on there being one. What’s more, federal biofuels mandates and renewable-energy incentives in other states and countries will continue to provide a market for these companies.
For example, 28 other states have their own renewable electricity standards. If Proposition 23 makes California less attractive for renewable energy, “there are still opportunities for us to build in Texas, Brazil, China, or India,” says David Berry, a partner at Flagship Ventures in Cambridge, Massachusetts.
Incentives for electric and plug-in hybrids cars will remain in place in California, because emissions requirements are supported by laws other than AB 32.
Overall, however, there is concern that if Proposition 23 passes, it will discourage investors from putting their money into new energy technologies by adding to the growing uncertainty about energy policy in the United States. One of the biggest challenges for government is convincing investors that incentives will remain in place long enough for them to earn a profit, and suspending existing regulations won’t help with that. “If Proposition 23 passes, it will raise questions about the credibility of any rules in this area,” says David Victor, a professor at the School of International Relations and Pacific Studies at the University of California, San Diego.