Here's the problem:

Schwarzenegger has been promoting a California cap-and-trade system, whose fundamental policy objective is to achieve least-cost emission reductions. The California Air Resources Board has estimated that the incremental cost of going to a 33% RPS (from the existing 20% mandate) would be $133/MT. The trading price for the cap-and-trade portion of California's AB 32 legislation is projected to be $10/MT, which means that utilities will (according to economic projections) be compelled to incur marginal costs of $133/MT while alternative, GHG-equivalent compliance options are available for around $10/MT. (SEE CARB's Proposed Scoping Plan for AB 32.) How can the cost be justified?

CARB asserts that there are "energy diversity" benefits that justify the $133/MT cost. But while petroleum dependence in the transportation sector is also an issue of energy diversity, CARB is not imposing similar costs on transportation. (In fact, the proposed AB 32 regulations for passenger vehicles would yield projected net savings of $262/MT.) So how can you justify $133/MT when the trading system is yielding emission reductions for $10/MT and transportation is getting $262/MT savings?

There's another even more fundamental problem:

If if the benefits of a 33% RPS (including "energy diversity") would justify the $133/MT cost, then those benefits would justify an even higher RPS if costs turn out to be much lower, as will very likely be the case. (Conversely, the 33% target would probably not be justified if costs turn out to be $1000/MT.) So a fixed target, like 33%, only makes sense if we don't care about costs. But we evidently do care about costs; otherwise the target would be 100%.

I'm totally confused. Can someone please explain this to me?

"All retail sellers of electricity shall serve 33 percent of their load with renewable energy by 2020" (not 2030).

Just have to point out that the Sunrise Powerlink, a proposed transmission line mentioned in Joe's quoted article, is NOT about bringing renewable energy to Southern California. If there weren't already enough  proof of this, California Public Utilities Commission President Mike Peevey just proved it again with his proposed decision to allow the line to be built with no requirements that it actually carry renewable energy. Another proposed decision would require SDG&E to guarantee that 91% of the line's capacity be renewable, a requirement that would seem to make sense, given that SDG&E has always sold this as a "renewable energy project." But SDG&E strenuously objected to any such requirement, and now Peevey is giving the company everything it wants. We could end up with a situation where the Sunrise Powerlink carries all or mostly carbon-based energy, while SDG&E meets California's new 33% renewable mandate through buying credits. Find out more at www.desertblog.net.