STEVE INSKEEP, HOST:
Now, while U.S. delegates at the Durban conference think a new climate treaty is premature, one American state is going ahead on its own. California is set to limit climate-warming gases starting in 2013.
As NPR's Christopher Joyce reports, the state's argument is that it's good for the economy.
CHRISTOPHER JOYCE, BYLINE: California's climate law, known as AB 32, is a big step at a time when the state's economy is shaky. It puts a statewide cap on the amount of greenhouse gases coming out of smokestacks and tailpipes. At a hearing recently in Sacramento, skeptics gave state regulators an earful. Among them was single mother Kathy West.
KATHY WEST: I'm a maintenance mechanic at the ConocoPhillips refinery. At our Santa Maria refinery we just hired 12 operators and two mechanics. What's going to happen to their future, their families? What about your jobs when you get rid of the refining out of California?
JOYCE: There's no doubt this measure will make electricity and gas prices go up. How much is a matter of much debate - some say thousands of dollars a year for businesses. The state says costs pale in light of new business the law will create.
Mary Nichols runs the Air Resources Board, which administers the law. She says capping emissions forces companies to adapt.
MARY NICHOLS: Putting that cap on top of that whole system would be the best way to unleash the power of private capital to really get the most out of not just research and development but actual deployment of green technologies.
MATT HORTON: My name is Matt Horton. I'm the CEO of Propel.
JOYCE: Propel Fuels is the kind of green technology that Nichols is talking about. The company installs seals, gaskets, hoses, underground tanks and pumps that can handle biofuels. Companion laws to AB 32 will require more of them, and they're already being dispensed at gas stations like this one near San Francisco.
HORTON: We did start out in Seattle as a company. We did move down here to California because it's a great market, a lot more vehicles, a lot more consumers that are interested in renewable fuels.
JOYCE: Horton says the climate laws create business.
HORTON: We would not be here in this state if it weren't for the favorable policies that state government had enacted.
JOYCE: Propel opened its 27th station this year - most are in California. Customers like Shawn Leong say bring it on. Leong owns a 1984 Mercedes that can run on straight biodiesel, like the recycled vegetable oil pumped at this station.
SHAWN LEONG: It's my lifestyle I choose. I own a florist and, you know, we don't create pollution - we try not to. My home has solar panels on it.
JOYCE: In fact, Leong is disappointed that the station here only pumps fuel with five percent biodiesel. He prefers the pure stuff. Some drivers are looking beyond the environmental benefits. Student Andre Savastru has modified his car to run on 85 percent ethanol, which is also sold at this station.
ANDRE SAVASTRU: You get a great deal of difference in performance. Personally, I've got about 40 to 50 horsepower more.
(SOUNDBITE OF CAR STARTING)
JOYCE: The biggest reductions in greenhouse gas emissions, however, will have to come from refineries and power plants. Each company will get allowances to emit a certain amount. If they can't live within the cap, they can pay someone else to reduce gases somewhere else. And that means business for a company called Jaco Environmental.
(SOUNDBITE OF DRILLING)
JOYCE: Just outside San Francisco, hundreds of cast-off refrigerators are scattered across the floor of a warehouse. Michael Dunham cuts into one with a power saw. He calls it filleting the fridge. The local electric utility pays people 35 bucks each for these old inefficient appliances. They're a drain on the electricity grid. They're brought here, to refrigerator purgatory, where Jaco takes over.
Dunham pries apart the fridge with a shovel.
MICHAEL DUNHAM: The most interesting thing we ever found was a rattlesnake.
JOYCE: What Dunham's after is the 10 pounds of foam that's inside the walls of the fridge.
DUNHAM: And embedded in that 10 pounds is one pound of CFC 11 gas.
JOYCE: CFC 11 is a chlorofluorocarbon, a form of Freon and a very powerful greenhouse gas - the kind that warms the planet. There are other CFCs in the fridge's compressor as well.
DUNHAM: It will all go up into the atmosphere if it's not taken care of. So what we do is we capture it.
JOYCE: Jaco removes the foam and other CFCs in the refrigerator's compressor and sends it out to be destroyed. California's climate law sets up a system to verify that the CFCs are destroyed. Each pound that's eliminated creates a credit. A company called Eos Climate buys those credits and then sells them to California companies that need to reduce their carbon footprint. Jeff Cohen, vice president of Eos, says CFCs are a climate time bomb buried inside old refrigerators.
JEFF COHEN: So what we did was create a financial incentive to pull this stuff out, to address the remaining banks of CFCs, not only in the U.S. but around the world.
JOYCE: So what regulators in California are doing is turning greenhouse gases into a commodity. You can make money by getting rid of that commodity, whether it's CFCs or methane or carbon dioxide. The experiment officially begins January 1, 2013. Christopher Joyce, NPR News.
INSKEEP: Part of California's experiment could involve what's called carbon ranching. We'll hear about that tomorrow.