Cover Story
The new gold rush
by Tim Watkin
California’s massive eco-makeover is setting a pace NZ will have to follow, as the world’s 12th-biggest economy develops lucrative technologies to capitalise on the green boom.
Ask many Californians about the green revolution sweeping the Golden State in the past year, and they will say it’s only natural. The natural habitat of trendy liberals and granola-munching hippies was always going to be the home of environmental politics and eco-friendly living. Being a bit different from the rest of America has always been the Californian way.
But California’s bold, world-changing green revolution is no longer being led by save-the-whale-types in rainbow-striped pullovers. The new foot soldiers in the battle to save the planet are California’s dressed-down businessmen and Silicon Valley’s venture capitalists. Stranger still, the charge is being led by the Republican state governor Arnold Schwarzenegger – a man with a famous liking for the gas-guzzling Hummer.
In a state where the car is king, the oil companies have been ordered to cut the carbon levels in their fuel. Carmakers have until just 2009 to reduce by 30 percent the greenhouse gas (GHG) emissions from their vehicles. Big power companies cheer at tougher environmental regulations and suddenly a state that’s the world’s 12th-largest producer of GHGs is an environmental hero. Welcome to the revolution, California-style.
The Bush administration remains paralysed by the debate on climate change, but as far back as June 2005, Schwarzenegger was declaring that “the debate is over. We know the science. We see the threat, and we know the time for action is now.”
The timing of the latest California initiatives could hardly be better: oil prices are rising; alternative fuel and energy technology is on the cusp of viability; and in a post-9/11 America bogged down in a war in Iraq, depending on the Middle East for oil is an unpopular and dangerous game plan: “energy independence” is the new buzz phrase.
Schwarzenegger has put his political legacy at stake – in the process reviving his flagging political fortunes – with the most aggressive set of climate-change policies the world has yet seen: a string of tough targets to reduce GHG emissions and generate more electricity from renewable sources (see box, page 20).
California is going through the kind of massive eco-makeover that New Zealand will have to commit to if it wants to get anywhere near Prime Minister Helen Clark’s goal of being the world’s first carbon-neutral country. The bad news for us is that where California leads, others follow; unless New Zealand acts quickly and boldly, it risks being left behind. The good news is that California’s approach offers a range of both political and policy lessons. Best of all it offers a raft of opportunities that Californians are more than happy to share with New Zealanders.
Schwarzenegger has pulled off his paradoxical revolution by bringing together California’s often contradictory green and blue traditions. He calls it “post-partisan” politics, but essentially he’s selling a message that everyone in the state can embrace – let’s save the planet, and let’s get rich doing it.
It’s a message that Californians understand. The state – famously liberal in social attitudes – is economically liberal as well. It grew rich from a gold rush and it has always been the place where people come to make their fortunes.
Dave Pearce is one such. A “serial entrepreneur”, he is as much a paradox as the revolution itself. He isn’t the tall, tanned and toothy Californian stereotype – he was born “back east” in Connecticut and started out in data storage – but he’s the quintessential new Californian businessman. Since arriving in Silicon Valley in the 80s, he’s started six companies. One of them, which went into liquidation in 2001, is now set to make Pearce a very rich man – all the while doing its bit to save the planet.
Sitting in his sunny office just down the road from corporate giants such as Yahoo and Intel, he talks about “the true costs of coal” with as much passion as any environmentalist.
“The pollution it causes, the health problems. I mean, wars in Iraq. If you start throwing in defence budgets and everything, the cost is huge.”
And what can help change all that? Solar. Pearce’s company, Miasole, is developing a new-generation solar cell made not from silicon, as most are, but from what’s called thin film. Starting with “six guys who had never made a solar cell in their lives”, the company now employs 135 people in Silicon Valley and 50 in Shanghai. Although it won’t start mass-producing its cells until later this year, venture capitalists last year poured $35 million* into the company and it won a $20 million research grant from the US Government.
Miasole is a leader in the burgeoning “cleantech” industry, for which Schwarz-enegger has high hopes. A UC Berkeley economics report last year suggested that California’s progressive climate policies, rather than being a drag on the economy, could add as much as $60 billion a year due to savings from energy efficiency and the growth of new and innovative technologies.
As Josh Bushinsky, western policy co-ordinator for the Pew Centre on Global Climate Change explains, “California hopes to be the centre of development for this new technology. The thought is this could be an extremely large market around the world.”
In other words, first in, first served. And American venture capitalists – VCs in the business – are embracing the vision. The new catch-cry in the Valley is “doing well by doing good”.
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