CA Governors’ Newsom & Schwarzenegger Revisit & Celebrate AB 32: the Global Warming Solutions Act of 2006
VX News here features a conversation between California Forward’s Kate Gordon, former Governor Arnold Schwarzenegger, and Governor Gavin Newsom, marking the 20th anniversary of AB 32, the Global Warming Solutions Act of 2006. Speaking at the California Economic Summit in Long Beach, the two governors revisit the bipartisan origins of the landmark law, including Schwarzenegger’s legal fight against the Bush administration and EPA over California’s authority to regulate greenhouse gases. They also make the case that AB 32’s economy-wide architecture has decoupled emissions from growth. Newsom details the program’s evolution into cap-and-invest, now extended to 2045 in statute. Read the conversation below.
Liane Randolph: California has been the birthplace of so many monumental environmental firsts. The science of measuring smog-forming pollution was developed here. California’s clean air regulatory framework was developed before the federal Clean Air Act. The Air Resources Board was created before U.S. EPA. And AB 32, the groundbreaking climate change law that set the state on a path to achieving greenhouse gas reductions while growing its economy, was developed here 20 years ago this year.
As the two leaders we are about to hear from will undoubtedly discuss, that legislation was achieved on a bipartisan basis. It set the state toward a carbon neutrality goal. It resulted in the creation of the cap-and-trade program—now cap-and-invest—which has generated substantial revenue for the state. And it has had incredible success.
The economy-wide approach, and AB 32’s direction to collaborate with other states and countries, has led to remarkable innovation and entire new industries. Since 2019, California has seen an 85 percent increase in zero-emission vehicles and chargers, and a 77 percent statewide increase in kilowatt-hours of renewable energy produced per resident. You can track these real-world benefits of AB 32 on the California Dream Index on California Forward’s website.
To talk about that continued success, the genesis of AB 32, and the importance of decarbonization to the California economy, I’m very excited to introduce California Forward’s Kate Gordon, in conversation with Governor Arnold Schwarzenegger and Governor Gavin Newsom.
Kate Gordon: Governor Newsom used to be my boss, so I feel like I never really lose that. I’m so honored to have these two phenomenal governors here. We’re here to mark an incredible anniversary: 20 years since Governor Schwarzenegger signed AB 32. Governor Newsom, I think you might have been standing behind him at the time.
Gavin Newsom: I was mayor of San Francisco then. You can see me in the background, with dark hair, back in the day.
Arnold Schwarzenegger: Before we start, I want to say how happy I am to be here today. Thank you for moderating, and it’s great to sit here with Gavin, our governor. I want to start with a compliment. People asked me yesterday what I wish I had added or changed when we did AB 32. I said I would have combined it with CEQA reform—the permitting process. I didn’t think about it much at the time; I was focused on AB 32 alone. Governor, you have taken on the tremendous challenge of reforming CEQA, and you’ve delivered some really good reforms. Congratulations. It’s going to help the state of California tremendously.
Kate Gordon: We’ll get into that. Governor Schwarzenegger, take us back 20 years. You took on the challenge of putting California on a path to become a global leader on climate. That isn’t easy for a subnational governor. You’re not the president. This state isn’t even allowed in some of the UN negotiating rooms. Yet you said California would take a global leadership position. How were you able to lead from the position of a state’s chief executive? What are you most proud of, and what surprised you most?
Arnold Schwarzenegger: We showed the world what a subnational government can do. I’ve always believed that the action is not just at the federal level. When you look at the numbers, 70 percent of greenhouse gas reductions come from local and state governments, not the federal government. We should work with the federal government; that’s very important.
But remember what it took. Legislation this big is very complicated. You need both parties satisfied, the public satisfied, business satisfied, environmentalists satisfied, local communities on board. That alone is an enormous challenge. Then, all of a sudden, the federal government tells you: “Wait a minute. What are you doing? You want to reduce greenhouse gases and pollution? Are you out of your mind? We have to study this before we give you a waiver.”
So I took Fran Pavley, a Democrat, who wrote AB 32 together with Fabian Núñez, and we went to the White House to talk to President Bush, and then to EPA Administrator Johnson. We said, “We are on a path to clean up the mess. You should help us.” They said, “We have to study this.” Study what? We knew they were full of shit. I told Fran, “Now you see firsthand what I go through.”
The federal government fought us every step of the way. So we went to court—against a Republican president—because it doesn’t matter whether you’re a Republican or a Democrat. What matters is that you represent the people, not your party. This was good for the people. It went all the way to the Supreme Court, and we won.
There were a lot of battles like that, but we came out victorious. And you hit on something important: the UN is making a big mistake. They hold COP 21, COP 22, COP 23, COP 24—they’ll be at COP 5,000 still talking about the same thing. Nations alone cannot solve this problem. They need subnational governments, because that’s where the action is. I’ve been trying to convince them of that for decades.
Kate Gordon: We had hoped the rest of the country would pick up on cap-and-trade. We had the Western Climate Initiative, and it didn’t go where we wanted. Governor Newsom, you’ve leaned in on subnational leadership and put incredibly ambitious policies in place, but you’ve had to do it amid significant backsliding at the federal level. How are you thinking about that leadership? What have you built on, and what have you had to do differently over these 20 years?
Gavin Newsom: Let me first pick up on this notion of post-partisanship—of not being red or blue. Our movement in California started in 1967, when Governor Ronald Reagan created the California Air Resources Board. He was moved by what was happening in Los Angeles with smog and air quality, and by the federal government’s failure to move on tailpipe emissions. Three years later, in 1970, another Californian, President Richard Nixon, afforded California its waiver under the Clean Air Act. That same Richard Nixon created the EPA, signed the Endangered Species Act and the Clean Water Act. Fast forward to 2006: Republican Governor Arnold Schwarzenegger.
That is interesting to me as a Democrat. It’s a three-legged stool—three iconic Californians who have much to do with the architecture of California’s dominance, not just nationally but globally, on low-carbon green growth.
Today, in the spirit of the governor’s comments, California recognizes its role and responsibility in the absence of federal leadership. The headwinds from the Trump administration are well established. Their vandalism of our efforts is second to none. It is jaw-dropping what they have been doing to try to gut our leadership in this space.
But California has doubled down on the subnational framework, including working with the United Nations. The United States was nowhere to be found at the last COP in Belém, Brazil. China sent some 1,000 representatives; not one came from the federal government. California was the only game in town, in the spirit of what the governor architected in 2006.
We now co-chair the Under2 Coalition, developing strategies with provinces, states and municipalities around the globe to substitute for the lack of federal engagement. Through America Is All In, we’re working with cities across the country, and with the Pacific Coast Collaborative on the West Coast. Our Jobs First initiative, which we were discussing earlier, has been bottom-up. Total consumption is nothing more than the sum total of local consumption, as the governor implied.
What’s remarkable, 20 years later, is that we’re proving the genius of “and” over the tyranny of “or.” It’s not even debatable anymore. It was a big debate at the time. Oil companies said you’re going to wreck California’s economy—you can look back at the hysteria that came out of the oil lobby. Since peak greenhouse gas emissions in 2004, we’ve reduced emissions 28 percent, and we’ve doubled the size of our economy. We were the eighth-largest economy back then; we’re now the fourth-largest in the world. We have changed the way we produce and consume energy while creating jobs and innovation, and we are dominating in this space. Everything we asserted has now been proven.
Kate Gordon: I love that you brought up the economy and the perceived tension between jobs and the environment that we hear about all the time. Both of you led a state with a significant oil and fossil fuel economy and a great deal of legacy industry, and both of you have done a phenomenal job on that transition. Governor Schwarzenegger, how do you think about climate and the economy, and the transition from legacy industry to a clean energy economy?
Arnold Schwarzenegger: When you do something like this, you have a little more than half the people with you and a little less than half against you, and the opposition was screaming loud. They said California would fall into the ocean, that it would be disastrous for the state. Just as the governor said, the oil companies said this was the worst thing that had ever happened.
Some politicians work their way up and have much more education in this subject than I did. I didn’t have that much expertise in the specific field. I was very lucky to have Terry Tamminen and Susan Kennedy with me, people who were real experts, who had studied this, and I listened to them very carefully and trusted them. I got together with the experts and the economists, and they said, “Mr. Governor, if this works out well, it could create a lot of jobs.” When I heard that, I said, “That’s exactly what we want. We want to create a green economy.” I hoped I would one day see people from the oil companies switching over to the green economy, building solar panels and all of that. That is exactly what happened.
Look at it now: we have created more than 500,000 jobs. Our economy has grown dramatically—the fastest growth of any developed economy in the world. At the same time, our greenhouse gases have been reduced by 26 percent. So you can do both, and that is the message that is important for the world.
At the UN conferences, countries sign up and say, “We are going to be carbon neutral in 20 years,” or “We’ll reduce greenhouse gases 25 percent by next year.” But more than 70 percent of countries are not keeping their promises, because there are no teeth behind them. We have an Air Resources Board here in California. When we pass environmental legislation, the Air Resources Board doesn’t look left or right; it looks straight ahead. Here’s the goal; we’re going to turn it into reality. That’s why I’m so proud. The world should learn that every country should have its own air resources board to follow through, so that when a politician comes to a conference and promises to reduce greenhouse gases, they actually follow through rather than making an empty promise.
I’m so happy that you went to the Brazil conference, Governor, and let them know that California is the perfect example of what can be done when people come together and don’t treat this as a Republican or a Democratic issue. I always say I stood on the shoulders of Ronald Reagan, Jerry Brown, Gray Davis and others; they gave me the power. Then Jerry Brown stood on my shoulders, and now Gavin. We keep building on that. Now our goal is to become carbon neutral by 2045. That’s a very tough goal to accomplish, but somehow we will get there.
Gavin Newsom: That’s an important note on goal setting. We’ve exceeded our goals years in advance. We’re not in the goal-setting business; we’re in the implementation business, along the lines of what the governor began. That relates to CEQA reform and how we need to get out of our own way to finish the job.
We’ve installed 39,000 megawatts of utility-scale clean energy in the last seven years—7,000 megawatts last year alone, which was record-breaking. We have 23,000 megawatts of battery storage. That’s why we haven’t had a Flex Alert in four years. We went from 770 megawatts in 2018 to 23,000—second only to China. Again, that’s because of the price signals established in the architecture of cap-and-trade.
We started with AB 32, then came SB 32, and I was privileged to sign the 2045 carbon neutrality law, building on the successes of the past. What the governor built was the largest subnational carbon market in the world. Thirty-seven billion dollars has been reinvested since that bill was signed, disproportionately in disadvantaged communities. Sixteen billion dollars of that went back to offset the cost of electricity bills. Affordability is the big question, and just last year, $886 million went back to ratepayers to reduce their bills. We expect another $8 billion over the next four years through what we now call cap-and-invest.
What he architected was an entire system that has allowed predictability in a world of chaos, and has allowed investment unprecedented in the United States. There is no Elon Musk without what Governor Schwarzenegger did, because there would be no Tesla. There would have been no predictability. He created the incentives for that big risk and that big bet in this state.
We now have more than 500,000 clean energy jobs—seven to one, clean energy jobs to fossil fuel jobs. We are on the other side of the debate over whether this is good for the economy. It is growing the economy as we continue to decarbonize.
And I’ll close on this: it is becoming the most critical national security issue in the United States of America. I just left Ford’s Skunk Works, right here in Long Beach, which is developing the next generation of electric vehicles—because China is kicking our ass. China holds some 70 percent of the global market. This is not about military power; it’s about economic power. They are flooding the zone in the world’s supply chains and in statecraft. Our legacy manufacturers will not exist in a decade unless we double down on what the governor created 20 years ago.
This is a foundational issue of our time, and I’m not being ideological about it. Folks on the other side have their heads in the sand, bought by Big Oil. We are on the other side of this debate, and I can say that because this state—the fourth-largest economy in the world—runs on 100 percent clean energy for part of the day, nine out of ten days. That is happening at scale in California, and we would simply not have it without Governor Schwarzenegger’s leadership 20 years ago.
Kate Gordon: We talked earlier today about the Jobs First program. Many of California’s regions have identified advanced manufacturing as a huge opportunity. Building out our supply chains is critical for security and for economic mobility. California has excelled in innovation and in deploying clean energy. How do we lead even more on the supply chain side—on the manufacturing jobs that offer high-quality careers to people without a four-year college degree?
Arnold Schwarzenegger: The most important thing California has created is stability. It doesn’t matter whether there’s a Republican or a Democratic governor; history shows we continue on the mission: reducing greenhouse gases, clean air, the renewable energy economy. That drives investment, because the only way to succeed is to put money into something.
My mother-in-law, Eunice Shriver, who started the Special Olympics, always said you can have the best ideas in the world, but if you don’t have the money, you have nothing. It’s exactly the same here. You need investment, and investors only feel safe when there is stability. When someone comes to California, they know this law does not change from one year to the next.
With the federal government, it’s a disaster. Policy changes completely from one administration to the next. One administration, you’re all in; the next, you’re all out. How can anyone count on anything at the national level? You can’t. That’s why everyone is coming to California. I wish the whole nation would do the same, but in the meantime, we enjoy the fact that everyone is coming here because we are stable.
And I’m so excited to see, literally, people from the oil companies changing over to the clean economy—building cars, testing cars, building solar panels and all kinds of green technology for the state. It’s a dream of mine becoming reality. I believe that what happens in California will happen worldwide.
Gavin Newsom: Governor, you just gave my speech. I go around saying that California is a stable and reliable partner, and that Donald Trump is temporary.
We just extended the cap-and-invest program to 2045, creating that stability. It’s now locked into statute. And as the governor referenced, there’s a hammer: every five years we put out a scoping plan, which is the business plan—and it’s the law. That’s a very different construct from goal setting. It’s a different regulatory posture.
That regulatory posture has done some interesting things for investment, along the lines of what the governor implied. Fifty-five ZEV manufacturing companies are now in California. No one else comes close. Ford’s Skunk Works is its R&D operation—of course it’s in California. Where else would it be?
One more proof point that we’re on the other side of this—we just got these numbers. Someone told me there are 120,000 gas pumps in California, and asked how many public electric vehicle chargers there are. It turns out it’s almost double: 224,000, and about 1.2 million private chargers. People on the other side need to update their talking points.
I want to underscore the backdrop in 2006. The same president the governor met with—who, being generous, was talking about task forces—had pulled the United States out of Kyoto. Electric vehicles were a novelty. The Stern Review had just come out, warning that the cost of inaction would be far worse than the cost of action. People were calling for leadership, and it was nowhere to be found in the United States of America. The EU was waking up and looking at carbon markets.
I hope you understand where he was when he signed this bill on Treasure Island in 2006, and how big a deal it was for the economy, for the reputation and values of this state. In many ways, we are the tip of the spear for the United States as a consequence of that leadership.
You may wonder why I came back today. I really wanted to double down on complimenting the governor for his leadership in this space. It should not be forgotten. It will inure to the benefit not just of all of us today; I assure you we will look back on it as a seminal moment in American history, because it gives America a fighting chance in the global arena to capture market share in the next big economic opportunity.
Kate Gordon: Amazing. Thank you so much.
Arnold Schwarzenegger: I just want to add one thing, because it’s very important. It’s one thing to accomplish something; it’s another thing to hold on to it. There will be many battles in the future from people who want to take this away from us.
Remember, in 2010, out of nowhere, oil companies came to California with millions of dollars and attacked our environmental laws with Proposition 23. They asked the people to vote yes to put these laws in a deep freeze. I told them, “I’m going to terminate you.” And that’s exactly what we did. We raised money, we went up and down the state, and we kicked their ass. We won with 60-some percent of the vote, and we left them with a message: you can’t screw around with California.
We didn’t fall back. We didn’t take this lying down. And I want to warn you: there will be other threats coming. It’s natural. But when I look out at this room—the power, the intelligence and the action in here—I know you’re going to push back, and push back, and push back, and never let anyone take this away from us again. Never again. Thank you very much.
