Oil Watchdog

Arnold Schwarzenegger needed help. It was Aug. 9, 2003, three days
after the Austrian-born actor had stunned Californians by announcing
his bid to unseat Gray Davis, the Democratic governor, in a recall
election. Overnight, Schwarzenegger had morphed from a gun-toting
action star into a leading contender to become chief executive of the
world’s eighth-largest economy.

Now, he was rushing to form a platform. Near the top of his list: global warming.

"I did not come into this campaign as an environmental expert,"
says Schwarzenegger, who read the conservation speeches of President
Theodore Roosevelt on his Gulfstream jet as he travelled east that
August.

He was spending the weekend at the Kennedy compound in Hyannis
Port, Mass., with his wife, Maria Shriver, a member of late president
John F. Kennedy’s clan. Schwarzenegger discussed his nascent
environmental ideas with Robert Kennedy Jr., Shriver’s cousin and an
outspoken environmentalist. Kennedy put Schwarzenegger in touch with
Terry Tamminen, founder of Santa Monica Baykeeper, a group that combats
water pollution in Southern California.

Tamminen was skeptical. He’d raised money for vice-president Al
Gore’s White House run in 2000 and was critical of the Republican
record. Now Schwarzenegger, 60, a Hummer-driving Republican, was asking
a tree-hugging Democrat for advice.

"The Republican Party hadn’t covered itself with environmental
glory," says Tamminen. "Then I thought, this man could be the next
governor, so don’t we want to make sure he has the most-progressive
policies?"

Four years later, the "governator" has ushered in the Global
Warming Solutions Act, the first U.S. legislation of its kind. The law,
which Schwarzenegger signed on Sept. 27, 2006, requires California’s
industries to cut greenhouse pollutants such as carbon dioxide 25 per
cent, to 1990 levels, by 2020.

Five states — New Jersey, Minnesota, Washington, Oregon and
Hawaii — have passed look-alike laws this year. Three bills in the
U.S. Senate and two in the House of Representatives are pressing for 14
per cent CO2 reduction tar-gets by 2020.

"California is the model," says Daniel Esty, director of the
Yale Center for Environmental Law and Policy. "Governors in a dozen
states are now taking the issue seriously, and the groundwork is being
laid for a federal policy."

Other leaders rang the climate alarm before Schwarzenegger did.
Gore called for environmental changes when he was vice president and
heightened the debate with his 2006 documentary An Inconvenient Truth
and his Nobel Peace Prize, which was awarded in October. Yet, it’s
Schwarzenegger, a former bodybuilding champion who conquered Tinseltown
by playing an unstoppable cyborg called the Terminator, who is writing
America’s global warming script.

"I was very determined to prove that you could create economic
growth and protect the environment simultaneously," he says. "I knew
that my strength was being a Republican. I could win the business
community over."

U.S. policy will create huge ramifications for the rest of the
world: America is the No. 2 source of greenhouse gases, after China. If
average global temperatures rise 3 to 10 degrees Fahrenheit by 2100, as
many scientists predict, California’s snowpack in the Sierra Nevada
mountains could decline more than 70 per cent, jeopardizing the water
supply for a projected 60 million people, according to the California
Environmental Protection Agency.

Schwarzenegger’s
critics suspect his crusade is more Hollywood razzle-dazzle than
hard-nosed policy. Jamie Court, president of advocacy group Foundation
for Taxpayer and Consumer Rights, says the governor is an opportunist
who seized on global warming because going green is popular with
voters. "He deserves credit for pulling off a massive show," Court
says. "But when the public doesn’t see results, they shouldn’t be
surprised."

Environmentalists who’ve worked with Schwarzenegger beg to
differ. "He’s serious about getting this right, and no one else could
get the kind of media attention he can," says Fran Pavley, a Democrat
and former legislator from Southern California who co-authored the
global warming law.

With results — and winners — to be determined,
Schwarzenegger’s agenda has spurred a gold rush. The venture
capitalists who midwifed the Internet boom have poured funds into the
governor’s coffers and into startups making everything from so-called
clean coal to ethanol derived from wood chips. Investments almost
doubled in North America to $3 billion in 2006 from $1.6 billion in
2005, according to CleanTech Venture Network LLC.

Wall Street traders are eager to cash in on the green agenda.
The governor is overseeing the establishment of an electronic
cap-and-trade market set for 2012 that will permit buying and selling
of carbon emission credits like a commodity.

The environmental policies that Schwarzenegger started forming
that weekend in Hyannis Port are setting corporations, politicians,
bankers, VCs and traders on a tumultuous path.

In the next decades, the world will see whether the governor’s
global warming crusade is a good policy — or just old-fashioned
Hollywood hype.