Arnold Schwarzenegger, the outgoing Governor of California, yesterday criticised attempts by oil companies to suspend the state’s keystone climate change legislation.

Schwarzenegger told delegates at the Governors’ Global Climate Summit in Davis, California, that failure to reach an international agreement at Copenhagen last year, and the collapse of climate change legislation in the US Senate this year, had encouraged oil and coal companies to try to “kill our environmental laws”.

California’s groundbreaking AB 32 legislation aims to cut greenhouse gas emissions to 1990 levels by 2020, largely through an emissions cap-and-trade scheme that will be introduced from 2012. But earlier this month opponents of the bill, backed by two Texas oil companies, attempted to effectively kill the legislation by tabling a proposition during the state elections. Proposition 23 was eventually defeated, but if successful it would have suspended AB32 until the unemployment rate in the state drops to 5.5 per cent or lower for one year – a phenomenon that has occured only twice in the past 20 years.

At his last state climate summit as Governor of California, Schwarzenegger said: “Over the past several months an epic drama, an epic battle, played out right here in our state. This was a battle of old versus new, a battle of David versus Goliath. Polluting special interests, the same type of interests blocking international action and blocking action in Washington, recently descended on California to block our action here on the environment. They know that, as the world’s eighth largest economy, California has the power to push environmental change around the globe.

“They felt that, because they could already stop in Copenhagen all that environmental progress and they could stop already in Washington the environmental progress – that no one now in Washington is talking about energy and about the environment anymore – they thought there’s one more place left, which is California. Let’s go to California and crush them and then we eliminate all the problems and we don’t have to worry about anything for the next 10 years.”

Valero Energy Corporation operates two refineries in California, owns 83 retail outlets in the state, and employs 1,600 people on an annual payroll of $122 million. It launched proposition 23 along with Tesoro Corp. But it failed in the mid-term elections on November 2 after a high-profile campaign from supporters including former US secretary of state George Schultz, actor Leonardo DiCaprio and Microsoft founder Bill Gates.

Despite the governor’s criticism, Valero insisted that there remained strong economic grounds for suspending AB32, arguing that compliance with the regulation at its two refineries in California with AB32 would cost it $170m a year and much-needed jobs, in a state where 2.3 million people are already out of work.

A Valero spokesman said: “Prop 23 was a common-sense approach to the state’s economic crisis. We are concerned about the drastically bad effects that implementing California’s expensive new cap-and-trade regime would have on the state’s already-suffering economy.

“The governor and his allies ­­– Wall Street titans, hedge fund financiers and Hollywood billionaires – convinced Californians to vote for high energy prices and high unemployment.”

He also rejected suggestions that the proposition would have crippled California’s emerging clean tech sector. “Valero understands very well the economics of alternative energy, because we are in that business,” he said. “Valero is one of the country’s leading ethanol producers, with 1.1 billion gallons per year of capacity, and we built a 50-megawatt wind farm.”

But Schwarzenegger, who will step down as governor in January after two terms during which he has helped to establish California as one of the world’s leading clean tech hubs, said the defeat of Proposition 23 confirmed that there remained strong public support for climate change measures.

“Prop 23 was the largest referendum in history on clean energy,” he said. “Oil companies flexed their muscles and we flexed back and won [prop 23] by 22 points. We told them our environment is not for sale and we’re in the fight for the long haul.”

He also dismissed the argument that environmental legislation was contributing to the state’s high unemployment rate. “They claimed prop 23 was all about saving jobs,” he said. “An interesting argument, of course, given that in California clean energy is a powerful engine of economic growth. Green technology is the only area where we produce jobs right now in California, 10 times more jobs since 2005 than in any other sector.

“More than one-third of the world’s clean-tech venture capital flows right here to our state. We lead the nation in clean energy patents and clean energy businesses.”

Today the Governors’ Global Climate Summit hosts the official launch of the so-called R20 Regions of Climate Action, which aims to match investors from the World Bank or private investors with local governments to fund low-carbon projects.

The governor is also expected to announce a deal brokered by his Climate and Forests Task Force (GCF) between 14 states and provinces from the US, Indonesia, Nigeria, Brazil and Mexico, to create the world’s first compliance market in forest protection that will dovetail with the UN’s REDD (Reducing Emissions from Deforestation and Forest Degradation) scheme.

By Felicity Carus in Davis, California