WASHINGTON — The November U.S. midterm elections could shift control of the House of Representatives and possibly the Senate to the opposition Republicans, moves that would have widespread implications for U.S. policy on all fronts. But an obscure-sounding referendum in the state of California, if passed by a plurality of California voters on November 2, could have a greater impact on the U.S. energy and climate debate than any shakeup in Congress.

In California, about 430,000 signatures are enough to trigger a statewide referendum to overturn existing laws or to mandate new ones. In past elections, this populism has created no end of trouble for California’s leaders. A 1978 referendum mandated a two-thirds majority vote both to pass the state budget and to raise taxes, one of the reasons why California has had such difficulty passing a state budget recently. Voters decided in a 2003 referendum to recall from office Democratic Governor Gray Davis, which eventually led to Republican Arnold Schwarzenegger becoming governor. So it is ironic that the most keenly watched California ballot initiative this year, Proposition 23, threatens to abolish what is perhaps Schwarzenegger’s proudest achievement—a law to reduce California’s greenhouse gas emissions to 1990 levels by 2020 and by an additional 80 percent by 2050.

Technically, Proposition 23 would, if passed, suspend Schwarzenegger’s climate-change law until California’s unemployment falls below 5.5 percent for at least a year. This is a politically smart, if disingenuous, effort to portray the ballot initiative as a job-saving measure. California’s unemployment is currently over 12 percent and is not expected to decrease to 5.5 percent for years, so Proposition 23 would effectively kill the law and overturn many already enacted measures to reduce emissions, from vehicle technology standards to building codes to regional planning targets. The contest has attracted much interest from outside the state—a large chunk of the $8.2 million raised to support it comes from two Texas-based oil and gas companies.

So why is this one-state exercise in direct democracy so important to those not living in the state? On environmental policy, where California goes, so goes the United States and, at times, the world. If U.S. states are the laboratories of democracy, as President Thomas Jefferson said two centuries ago, then California is the most enthusiastic experimenter in environmental policy. The state’s regulations on pesticides, air pollution, and auto fuel-efficiency have all been the precursors to national legislation. California’s market is America’s largest, and regulations adopted there often set a de-facto national standard. Opponents of action on climate change have good reason to fear that California’s climate legislation could lead to wider action, both in the United States and abroad.

Passage of Proposition 23 is not assured. In addition to opposition from California’s famously eco-aware population, the state’s expanding renewable energy sector has created a business constituency in favor of retaining California’s climate and energy laws. Silicon Valley investors see clean-energy technologies as the next big thing in innovation. They and other business groups have matched the out-of-state funds backing Proposition 23.

But the race remains finely balanced, and the level of interest within and from outside California attests to the wider importance of this contest. Passage of Proposition 23 would negatively affect the state’s renewable energy sector. One immediate casualty would be the recently passed requirement that utilities produce a third of their power from renewable sources such as wind, solar, and biomass. Similar laws in Europe have provided regulatory certainty to stimulate a rapidly growing renewable energy sector. To date, California’s clean-energy regulations have helped the state attract 40 percent of all U.S. venture capital for clean technology since 2006.

Passage of Proposition 23 would also undermine similar legislation currently being considered at the federal level and in other states. European companies, among the largest investors in the U.S. renewable energy market, are worried about the potential signal that passage of Proposition 23 could send. If renewable energy regulations are only supported by the public during times of economic prosperity, that will not provide an adequate investment climate to spur development of renewable energy technologies over the long term.

Finally, passage of Proposition 23 could dampen the Obama administration’s efforts to bring the United States back into a leadership position in the international climate negotiations. At last December’s Copenhagen climate conference, the United States committed to reducing its emissions by 17 percent by 2020. The federal government will have great difficulty achieving that target without action at the state level, particularly while Congress is unwilling to pass a comprehensive climate and energy bill. Conversely, however, defeat of Passage 23 could reinforce California’s pioneering role as a climate and energy leader and help to repair U.S. credibility in the global struggle against climate change.

Thomas Legge is a Program Officer with GMF’s Climate & Energy Program.

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