As mudslides on the west coast and an epic blizzard on the East Coast competed for news coverage last week, nothing could dim the glow of an economic report that contained a remarkable conclusion: Massachusetts Governor Deval Patrick is trying to make California Governor Arnold Schwarzenegger look like a carbon girlie man.

AP California Governor Arnold Schwarzenegger.

According to the Eastern Research Group, Massachusetts is on target to cut carbon almost 20 percent below 1990 levels by 2020, thanks largely to significant programs that improve energy efficiency in factories, buildings, and transportation. Those programs will save money, making Massachusetts more competitive than, say California. Governor Patrick is also doing it with wind and solar energy incentive programs, creating jobs and new domestic energy sources.

At the same time, by participating in the regional carbon cap-and-trade program, Massachusetts earned about $50 million last year that provided the seed money for these programs, along with funding of home heating efficiency retrofits for low-income families and job training for these emerging low-carbon industries.

Terry Tamminen
Former Secretary
California EPA

Never one to shy away from competition however, Governor Schwarzenegger delivered a speech last week by satellite to the Delhi Sustainable Development Summit in India, pledging California’s continued leadership in renewable energy investment and innovation. His audience needed no reminder that it was California’s low carbon policies—from auto emission standards to solar-powered homes—that had set the example for other states and nations (Massachusetts’ Global Warming Solutions Act of 2008 looks suspiciously identical to California’s version of 2006, for example).

Schwarzenegger also announced a plan to cut sales taxes on manufacturing equipment for solar panels, alternative fuels, and other cleantech products. Aiming squarely at states like Massachusetts, the Governator said the tax break would encourage manufacturers to expand their businesses in California rather than moving to other states that already offer the tax exemption.

With state budgets suffering these days, why give tax breaks to anyone? Because it makes good business sense. Like most states, California saw a steep decline in employment over the past two years—with the notable exception of cleantech jobs, which grew by 5 percent.

So who will be the real winners of this carbon weight lifting competition? Companies that invest in states like Massachusetts and California are going to prosper, because incentivizing efficiency and new industries creates much more long-term value than continuing business-as-usual.

Carbon is simply a measure of waste—and waste in any state or business is an unnecessary and unaffordable expense. Even a girlie man can understand that.

• The Carbon Challenge: Complete Coverage

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Terry Tamminen, former Secretary of the California Environmental Protection Agency, is a partner at Pegasus Sustainable Century Merchant Bank and the Cullman Senior Fellow at the New America Foundation. (Cracking The Carbon Code is a registered trademark of Terry Tamminen).