BEVERLY HILLS, Calif. — Junk-bond king Michael Milken, in his current guise as chairman of the Milken Institute, put a call-out Wednesday to financial professionals to help solve California's drought crisis and tackle climate change.
Milken's request came during a panel session he moderated at the Milken Institute's Global conference with California Gov. Jerry Brown and state Senate President pro Tem Kevin de Leon, both Democrats.
The financial community has risen up in other times of challenge to create financial incentives, Milken said.
"We were honored at Milken to work in those areas," Milken said.
He pointed to sulfur bonds that helped finance projects aimed at reducing acid rain as an example of what could be done.
"When acid rain was pouring down in large areas of the country, financiers came up with sulfur bonds to help pay for scrubbers and other methods of reducing air pollution to solve that problem," he said. "I know the senator and the governor want to challenge you to develop new financial models to deal with today's problems."
Milken, the former junk bond king of the 1980s, recreated himself after pleading guilty to six counts of securities fraud in 1990 and being sentenced to 10 years in prison. His sentence was later commuted and he was released in 1992 after serving 22 months. He was also forced to pay much of the huge bonuses he earned at Drexel in fines and settlements.
Since then he has built the Milken Institute into a philanthropic think tank with global reach.
Milken called California a leader in addressing climate change.
He pointed to the 2006 passage of AB32, the California Global Warming Solutions Act, which required sharp reductions in greenhouse gas emissions, and the governor's more recent water conservation plan for dealing with the prolonged drought.
It has been a big week of environmental announcements for the California governor, who Wednesday introduced a package aimed at reducing carbon emissions by 40% and Tuesday announced a program that would fine big water wasters up to $10,000.
California is in its fourth year of drought and the state's mountain snow pack, which usually provides about a third of the state's water, is at the lowest level on record, according to the California Department of Water Resources.
Last year was the driest year on record in the state, de Leon said.
Even as people in the Central Valley, the state's largest agricultural region, have faced situations in which wells ran dry, in some parts of Los Angeles it looks like the gilded age, de Leon said, referring to recent discussions about residents maintaining plush lawns.
The state is the 7th largest economy globally, and carbon emissions are impacting the economy, de Leon said.
Milken asked Brown if legislators agree that something needs to be done about climate change, or if there are bipartisan disputes.
"The legislature and the Senate are pretty much in sync on this," Brown said.
He said the U.S. senator from Oklahoma, Jim Inhofe, who put a snowball in his hand to dispute the existence of climate change, as engaging in "magical thinking."
Brown ticked off what he called immediate problems including conflict in the Middle East and the violence in Baltimore.
Climate change is a different kind of crisis, Brown said.
"Those are immediate, but we have a slow-rolling crisis that before you know it, we will be past the tipping point, and the melting ice cap in Greenland will be causing a crisis," Brown said. "It is serious; it is catastrophic and it is longer term."
Brown set a goal of a 40% reduction below 1990 levels by 2030 — the most aggressive benchmark enacted by any government in North America to reduce carbon emissions over the next decade and a half
"With this order, California sets a very high bar for itself and other states and nations, but it's one that must be reached - for this generation and generations to come," Brown said.
The governor said his executive action sets the stage for the important work being done on climate change by the legislature.
The executive order aligns California's greenhouse gas reduction targets with those of leading international governments ahead of the United Nations Climate Change Conference in Paris later this year, according to the governor's office.
The European Union, for instance, set the same target for 2030 just last October.
According to the governor's office, California is on track to meet or exceed its current target of reducing greenhouse gas emissions to 1990 levels by 2020, as established in the California Global Warming Solutions Act of 2006.
California's new emission reduction target of 40 % below 1990 levels by 2030 will make it possible to reach the ultimate goal of reducing emissions 80% below 1990 levels by 2050, the Brown administration says.
This, the administration says, is in line with the scientifically established levels needed in the U.S. to limit global warming below 2 degrees Celsius - the warming threshold at which scientists say there will likely be major climate disruptions such as super droughts and rising sea levels.
The governor's order received praise internationally from some.
"Four consecutive years of exceptional drought has brought home the harsh reality of rising global temperatures to the communities and businesses of California," World Bank Group President Jim Yong Kim said in a prepared statement. "There can be no substitute for aggressive national targets to reduce harmful greenhouse emissions, but the decision today by Governor Brown to set a 40 percent reduction target for 2030 is an example of climate leadership that others must follow."
Ontario, Canada Premier Kathleen Wynne said she applauded Brown's continued leadership on climate change.
"This shows the important role that sub-national governments can play in shaping a strong global agreement on climate change later this year in Paris," she said.
Former New York Mayor Michael Bloomberg called California's 2030 goal to reduce carbon emissions "not only bold, it's necessary - for the economy and our future."
"Addressing climate change is critical for our environment and economy, so I want to applaud Governor Jerry Brown for extending our state's global leadership as we are setting new targets here in Los Angeles," said Los Angeles Mayor Eric Garcetti.
"Thanks to Governor Brown, Senator Kevin de Le-n and other environmental leaders, we are growing the economy while cutting emissions in California," Garcetti said. "And here in Los Angeles, we have set our own target to reduce emissions by 45 percent by 2025 and 60 percent by 2030."
Garcetti vowed to not only work with Brown, and his fellow U.S. mayors, but also the world "to support bold responses to climate change and the strongest possible agreement at the Conference of Parties meeting this December in Paris."
