Even when that polluter bankrolls a lot of bike racks.

Like dozens of Bay Area communities, from Los Altos Hills to Healdsburg, Benicia has adopted its own greenhouse-gas reduction goals to try to roll back local emissions over the next decade. The city's new Community Sustainability Commission is busy evaluating dozens of possible strategies contained in the "Benicia Climate Action Plan." They range from increasing wind energy generation to creating a citywide composting program. Unlike most financially strapped local cities, Benicia actually has money to spend on such efforts.

Yet, some 94 percent of the community's emissions come from industrial and commercial sources, with the majority emitting from a single one: the Valero Benicia Refinery, which is owned by the Valero Energy Corp. At last count, in 2005, Benicia emitted greenhouse gases equivalent to 4.25 million metric tons of carbon dioxide per year. In 2008, Valero's refinery and asphalt plant emitted 2.8 million metric tons, making it the seventh largest such polluter in the state, according to the California Air Resources Board. A single such metric ton would fill a space 27 feet wide, 27 feet high and 27 feet deep, which looks like this.

Tasneem Raja

See how many tons of C02 local industries release each year.

If you want to fight climate change in Benicia, Valero is the emitting elephant in the room. The city’s powerlessness over the company’s emissions mirrors the predicament of other Bay Area cities that are seeking to formulate sustainability models in the shadow of industrial giants that operate well outside the reach of local regulators.

"We don't have the regulatory authority to do anything about their greenhouse gas emissions," said Amalia Lorentz, Benicia’s economic development manager. "We rely heavily on the state’s regulatory mechanisms."

The result has been an often-contradictory relationship between Benicia and a company whose taxes account for more than 20 percent of the city’s general fund revenues. On the one hand, Valero is spending hundreds of thousands of dollars to support solar power in Benicia, the creation of a “green academy” at the local high school and the installation of bike racks throughout the city. A representative from the refinery even sits on the city's sustainability commission as a non-voting member.

On the other hand, the energy company, which is headquartered in Texas, is working to eviscerate California’s 2006 landmark global warming law, AB 32. If successful, the initiative would eliminate the state's hope of ensuring that companies such as Valero are held accountable for their impact on climate change.

"Here they are saying to Benicia: 'Oh no, you're too small, you can't regulate us. The state has to regulate us.' Meanwhile, they're out pouring hundreds of thousands of dollars into a ballot initiative to stop the state from regulating them," said Kristin Eberhard, an attorney, who is the legal director of Western energy and climate projects for the Natural Resources Defense Council.

Valero has donated $500,000 to the California Jobs Initiative Committee, a group working to suspend the implementation of AB 32. In early May, the committee submitted 800,000 signatures to the state to get the measure on the ballot in November. The initiative would freeze AB 32 until state unemployment holds steady at 5.5 percent or lower for at least a year.

With unemployment currently hovering above 12 percent, Valero's effort has inspired everyone from Gov. Arnold Schwarzenegger to activists staking out a Valero gas station in Oakland on Earth Day to castigate the Texas-based company for meddling with California's global warming law.

"I think it's awful and horrid, and I'm very disappointed," said Elizabeth Patterson, the mayor of Benicia, in an interview.

Valero's spending at the state level and locally in town seem at cross-purposes, a fact which is not lost on a local Valero official.

"It seems odd that we're on both sides of a particular issue," said Chris Howe, director of health, environment, safety and government affairs for the refinery. "But the direction we're trying to take on the sustainability committee is just to be wise in our investment."

At a recent commission workgroup meeting, Todd Lopez, environmental manager for the refinery, dismissed the notion that Benicia could hope to play a role in reducing the its emissions, which are by far the largest source of emissions in the community. "I don't see how the city is going to add value to what the state and the Bay Area Air Quality Management District are trying to do in terms of regulating C02 impacts from refineries," he said. Valero is already working to use energy more efficiently, he said, and will continue to do so "regardless of regulation" because the company's largest cost is energy.

Ironically, the funding for Benicia's local efforts to fight climate change comes from Valero. For the past seven years, the company has been under pressure from a watchdog group known as the Good Neighbor Steering Committee, which raised questions about the environmental impacts of the Valero Improvement Project, a series of additions and upgrades to the refinery's facilities. While the dispute never came to a lawsuit, it has led to a big payout.

On May 4, 2010, the Benicia City Council approved a revision to a 2008 settlement agreement which provides $14 million to fund water conservation and climate action projects over the next five years.

Some $600,000 is designated for implementation of the city's climate action plan. But as much as $4 million of the $14 million settlement may be available for the Community Sustainability Commission to help the City Council determine where it should be spent, according to Dana Dean, a spokesperson for the Good Neighbor Steering Committee.

Back in 2008, when Benicia set its emissions reduction goals, the community chose a modest one for 2010 – maintaining 2005 emissions levels – due to the city's lack of regulatory control over its biggest emitter and the fact that much of state's attempts to curb greenhouse gases would not have begun yet.

Benicia's goal to reduce emissions to 10 percent below 2000 levels by 2020 assumes that AB 32 will be in full effect. "This is achievable because the refinery, source of much of the community emissions, is going to be required by the State to meet AB 32 requirements," reads a staff report recommending the targets that were eventually adopted by the City Council.

Without AB 32, Benicia's hopes of significantly reducing emissions will likely disappear like so many melting glaciers. Other industrial cities in the Bay Area, like Richmond, which is home to a Chevron refinery, find themselves in a similar predicament when trying to fight climate change at the local level. And across the Bay Area, industrial and commercial emissions account for 36 percent of all greenhouse gas emissions, according to the Bay Area Air Quality Management District.

Of course, Benicia represents an extreme case, since the city literally has a refinery in its midst, but many other local governments have set their own emissions reductions goals with the assumption that California would be leading the way on fighting climate change for years to come.

"Without a doubt AB 32 is critical to achieving the goals that all these local governments are setting for themselves," says Michael Schmitz, the California director of ICLEI Local Governments for Sustainability USA. "Weakening AB 32 or suspending it would be devastating for the abilities of local governments to meet their climate goals." Benicia, which is a member of ICLEI, followed the group's protocol and guidelines for its climate protection planning.

The city, which traces its industrial roots back to 1847 with the foundries of the Pacific Steamship Company, is all too aware of how tightly its finances are entwined with Valero. This year, the city faces a $500,000 loss in revenue because the refinery changed its source for natural gas, leading to a drop in the city's natural gas franchise fee. The refinery employs about 500 people full-time, about a quarter of whom live in the city, while 80 percent live within Solano County.

Patterson does not want to see Benicia left behind as a new green, alternative energy economy develops just because Valero refused to embrace it. "If they don't adapt and grow with the new economy, we are hurt," she said. "It's our self-interest, besides the fact that I'm a tree-hugger environmental person."