There seem to be more questions than answers in the financial world right now, since so much of what we face is completely new. So this week we'll address a couple of reader comments and questions we've fielded about clean energy in California.

First off, last week I speculated that Arnold Schwarzenegger may become the Secretary of Energy in Barack Obama's cabinet. That appointment would come as a result of the California governor's policy advances towards an alternative energy economy.

The fact that California has taken the reins of national clean energy efforts - both under this governor and previous executives - has also been voiced by the Wall Street Journal, the Guardian, and by the U.S. Department of Energy.

The DoE even says the following in its California state energy profile:

California leads the Nation in electricity generation from non-hydroelectric renewable energy sources, including geothermal power, wind power, fuel wood, landfill gas, and solar power.

However, a Green Chip Review reader named George pointed out that Schwarzenegger nixed a major methanol biofuel project in 2005 in favor of less efficient ethanol, and that if California's leadership under Schwarzenegger has been exceptional, "Heaven help us at the federal level."

We at GCR agree that the country followed political pied pipers through the cornfield maze of inefficient biofuel for far too long. Barack Obama, still a senator from Illinois, needs to wake up and realize that people like George are correct in their judgment that methanol hasn't gotten its due.

But we're dealing with a world of comparisons across the financial spectrum these days... Low-yielding treasuries are attractive, as making a .5% bond yield sounds a whole lot better than a 35% market loss.

Similarly, renewable fuel portfolio standards in vanguard states like California are not perfect, but such places and policies are judged by their relative advantage.

According to the California Public Utilities Commission:

The RPS program requires electric corporations to increase procurement from eligible renewable energy resources by at least 1% of their retail sales annually, until they reach 20% by 2010.

And my colleague Chris Nelder, a California resident who is not an easy guy to impress when it comes to green policy, points out that California's multi-billion-dollar solar energy subsidies dwarf Arizona's. That's despite the fact that Arizona has a larger natural solar resource than the Golden State.

Arnold is Already on a National Scale

California's economy would be the #7 largest in the world if it were its own country.

And Silicon Valley is almost certainly going to be the kind of industrial engine for the U.S. that Detroit was in the 20th century.

Consider why Detroit is now dwindling in population and productivity. It's because of a dearth of new ideas and a dirty fossil-fuel economy that never adjusted properly to changing consumer attitudes.

That brings us to another point raised by a reader named Bill, who remarked that GCR should "get off the global warming horse."

Whatever you think of Al Gore and his crusade to spread the "inconvenient truth," California's battle against smog predates the modern debate about global warming.  

CARB Cutting

California's Air Resources Board has introduced a plan to reduce greenhouse gas emissions to 1990 levels by 2020, and it's not because the Sacramento capitol is stacked with fools.  

Pollution is a primary issue of public health and competitiveness in an economy that prizes both. University of Southern California research shows that asthma and other respiratory illness risk increased 89% for every 3/4 mile closer to a freeway a child lives. So Governor Schwarzenegger launched the Help California Breathe Easier campaign in 2005.

As part of a comprehensive effort, companies like Google are pushing hard for the state to move everyone into Industry 2.0.

So the CARB plan, which is backed by Gov. Schwarzenegger, aims to incorporate high-efficiency technology in new homes, places of business, and automobiles for everyone's benefit.

In early October, the Governor also signed bills establishing a Green Collar Jobs Council and another to create zero- or low-carbon communities around California.

California is also pioneering a cap-and-trade system that will allow for some variation in how individual companies move towards the GHG reduction goal. Overall, though, a net reduction each year is a must.

With all of this, Governor Schwarzenegger has to speak the language of business and of responsibility at the same time. He has also dealt with the issue across party lines and could be able to sell emissions reduction to more GOP leaders than ever before.

Silicon Valley firms may be easier to persuade into clean energy technology than Ford or GM (in whatever form they still exist come Inauguration Day), but having run a successful country-scale effort to modernize through clean energy goals means Schwarzenegger has a voice of authority on true U.S.-wide implementation.

Whether California's progress to this point has been perfect is up for debate. But you can't argue the need for experience and political maturity when it comes to creating a greener and more prosperous American economy to lead us out of recession.

We always welcome your feedback, so keep the comments coming!

Regards,

Sam Hopkins

P.S. - We're not just limited to individual states in terms of clean energy comparison. International efforts to create competitive green economies mean a plethora of listed companies around the world are profiting. Green Chip International is recommending winning stocks in London, Frankfurt... even Oslo! To learn more, check out GCI today.