Now that Harry "Lucy" Reid has pulled the climate legislation football away at the last minute, cleantech investors can be forgiven for taking a big sigh and forgetting about climate policy for a while. After all, until a couple of years ago most cleantech VCs were adamant about purposefully ignoring policy efforts and effects, because of the randomness factor it would imply for their investments. Of course, with a more supportive administration and supposedly looming national climate legislation many VCs have ended up spending much more time on policy work and visits to Washington, DC than they'd expected to. And so it wouldn't be surprising to see these investors take the opportunity to step back from all that mess, to wait and see what happens at the Federal level over the next few months.
But one other big mess is still looming, on the opposite side of the country from Washington, DC. In California, Prop 23, an effort to roll back the state's landmark climate law AB32, is on the ballot in November. And the silliness is already in full swing (carbon emissions aren't "pollution", really?).
The damage to the cleantech industry if Prop 23 succeeds would hit more broadly than just in California, according to one report by the Clean Economy Network. Since California is such a major economic market, environmental regulations introduced in California tend to impact markets even outside of the state -- witness how California's auto emissions standards and goals have impacted automaker fleet efficiency efforts over the past few decades. Besides, so much of the US cleantech industry and venture dollar pool is based in California to begin with. Certainly, Prop 23 is already introducing regulatory uncertainty to the market across many cleantech sectors, and as mentioned in my last policy-related post, such uncertainty is damaging by itself.
It's unclear how Prop 23 will fare. On the one hand, early polling suggested that Californians were against it (ie: for keeping AB32 in place). On the other hand, the ad campaigns are just getting started, Prop 23 has some deep-pocketed proponents, Californians have a history of simply voting in favor of ballot props, and it's a non-presidential election year with a big backlash against incumbents and any and all regulation...
If Prop 23 passes it will mark a pretty big setback for the US cleantech industry. On the other hand, if it's defeated it will be a compelling example of the cleantech industry teaming up to win over public sentiment in favor of supportive policies. So with the US Senate increasingly looking useless on energy and climate issues, even being across the country in Massachusetts it looks like this California ballot initiative is something I personally will start spending more time on.
[Note: I'm the co-chairman of the board of the Clean Economy Network Educational Fund, which is a 501(c)3 (ie: non-advocacy) affiliate of - but separate from - the aforementioned CEN, so nothing in this column should be construed as representing CEN or CENEF or anyone other than me on any policy issues]
