In January 2010, California passed regulation over Green House gases by determining the pollution of fuels coming into California: LA times has coverage here:

“The Air Resources Board voted 9 to 1 in favor of the complex new rule, which is expected to slash the state’s gasoline consumption by a quarter in the next decade”

The move was historic with California, evidently not unnerved enough by the state’s precarious financial position to press on with passing a remarkably progressive piece of Climate legislation.

“The regulation requires producers, refiners and importers of gasoline and diesel to reduce the carbon footprint of their fuel by 10% over the next decade. And it launches the state on an ambitious path toward ratcheting down its overall heat-trapping emissions by 80% by mid-century — a level that some scientists deem necessary to avoid drastic global climate disruption.”

A few months ago I covered the early stages of this legislation that would indirectly ban oil-sands from Alberta. The struggle had everything you could hope for in a North American contest. Pitting Canada’s resource rich super power against the USA’s innovation dynamo and the clash was likely to have reverberations across the continent. Now it appears after California fired the first shot, domestic interests are responding. LA Times in a piece on February 3rd wrote:

“Trade associations for the oil, chemical and trucking industries filed suit in federal court in Fresno on Tuesday to void California’s first-in-the-nation low-carbon fuel initiative.”

The struggle is of no small importance, California is estimated to be among the world’s 10 largest economies and more importantly has the largest automobile market in North America. Underscoring this is its famous or infamous, depending on your preferences, role as a trend setter for the rest of the USA. Industry groups will need to stop the trend early or risk a policy spill over.

Interest groups argue that the policy represents an unfair advantage to California’s fuel produces, breaking federal competition laws. What this really amounts to is the rise of competition to oil producers, not from a single counter source but from steady erosion of singular fuel sources from diverse markets. Previously such fragmented emerging markets have not been a serious challenger and undoubtedly will be in the near future. However the backing of a market the size of California could have huge implications.

Roland Hwang of the Natural Resources Defence Council had this to say:

The oil industry needs to prepare for the day when they’ll have real competition,” he added. “California’s low carbon fuel standard gives them a clear road map to the future, but they apparently would rather be looking in their rear-view mirror.”

The contrast could not be more stark, as Canada and particularly Alberta aims to push itself onto the world stage through the leverage afforded by its increasingly prominent energy based economy, California is seeking to capitalise on its innovation to open up new emerging markets to build its strength around. California has already had environmental laws challenged, when automobile manufacturers lobbied against emission efficiency standards. They lost that battle then but this marks a new territory that cuts deep into energy politics and the perilous state of California’s finances will mark a new high tide in conflict of established versus emerging markets.

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