California Governor Arnold Schwarzenegger has been considered a friend of the green movement which is why many Californians were shocked and confused by his announcement that he intends to veto the climate bill passed by the legislature that gives the state of California the nation’s most ambitious renewable energy standard. It requires the state of California to use 33% of electricity from renewable energy sources like wind, solar and geothermal by the year 2020. Instead of signing the bill, the Governor will sign an executive order implementing the same goal but without elements he objects.
 
The Governor’s spokesman Matt David issued a statement saying that Governor Schwarzenegger will veto the bills saying they are “poorly drafted and overly complex”. A more detailed analysis into the reasons why the environmentally friendly Governor refuses to sign the renewable energy bill brings out certain interesting facts.

With this legislative bill, California will have one of the most aggressive standards out of the 31 states that require utilities to generate a certain amount of their power from renewable sources. However, a study by the state's utilities commission says that is unlikely in almost any circumstances to achieve this goal, due to the complexity and cost of the project. Even a 2020 goal of 20% renewables is most unlikely to hit on time. In Hawaii, utilities must generate 40 percent of their power from renewable sources by 2030 which is a much longer timeframe than the goal set for California.  The governor is not opposed to the goal of generating 33% electricity from renewable resources but he suggests an alternative plan in the form of an executive order to achieve the same target but with different directives. The order directs the state Air Resources Board to set new rules for utilities that require them to purchase more renewable energy.

This bill contains a special clause that would limit the amount of power that could be purchased outside of California. It would allow utilities to import renewable energy generated outside California as long as the power came from a plant that connects to California's electricity grid.

Consumer advocates and environmental groups sought the limits on out-of-state power because they wanted the bulk of California's renewable energy to be generated within the state and to promote green energy jobs in California, since power generation has mostly fled to less restrictive markets in Nevada over the last decade. Governor Schwarzenegger is of the view that these restrictions are nothing but protective schemes that will kill the solar energy industry in California and shoot up prices like the failed energy deregulation of the late 1990s. He wants the energy to be able to come from places like Montana or Arizona. State Republicans have said the restrictions could drive up energy costs for Californians by as much as $10 billion a year. The fear is that the plan would restrict electricity supplies and drive up prices.

The governor feels that the bills would not only drive up the energy prices abnormally, but this restriction on buying power out-of-the state would also stifle competition and result in an unhealthy energy market. The Independent Energy Producers Association, a trade group that represents generators of both renewable energy and traditional fossil-fueled power, also oppose the legislature’s renewable energy bill over concerns that the restrictions would be a major disadvantage to developers of renewable energy projects outside California. The bills also limits the placement of solar plants in some areas of the state, threatening projects that are already underway and others that are expecting to get funding through the federal stimulus package.

In order to achieve the renewable energy target, it has been calculated by the California Public Utilities Commission that the state would be required to nearly triple the amount of renewable energy it currently generates and therefore the state's utilities will need to build additional transmission lines and other infrastructure to move more renewable energy. Construction could cost $115 billion over 10 years. It is of the view that the bills passed by the legislature generate resistance to transmission line construction. The governor’s executive order is expected to combat some of this resistance which in turn would be a big boost to smaller renewable energy projects that don't have the legal budget to address issues with "not in my back yard" groups.

Schwarzenegger’s executive order broadly suggests an alternative plan for utilities to buy more renewable energy as opposed to the legislature bill’s restrictions on buying power out of the state; protection for utility ratepayers, removing barriers to building more transmission lines, and finally creating a healthy energy market.