CSAC Bulletin Article

New Proposals Would Shake Up Cap and Trade

May 4, 2017

Several recently introduced bills would have significant impacts on the state’s approach to reducing greenhouse gas (GHG) emissions. A decade ago, AB 32 (Nunez) passed, utilizing market-based compliance mechanisms to limit GHG emissions to 1990 levels by 2020 – we now call this the cap and trade program. SB 32 (Pavley), passed in 2016, cranks up the targets to reduce emissions by 40 percent compared to 1990 levels, with a goal of achieving this target by 2030. Now, legislators have introduced bills that would reimagine the state’s cap and trade program and approach to renewable energy.

Cap and trade allows emitters of pollution to purchase credits at auction, which sets a price on the GHG emissions and incentivizes a reduction while also providing funding for a variety of programs that make up elements of the state’s climate change strategy. In the Governor’s January budget proposal, he proposed $2.155 billion in cap and trade revenues to be allocated upon a two-thirds vote of the legislature to authorize the program beyond 2020. However, cap and trade auctions have frequently been disappointing in terms of revenue raised, with the most recent February 2017 auction producing rather dismal results.

SB 775 (Wieckowski) would create a cap and trade system that starts in 2021, set minimum and maximum prices for allowances at auctions, and establish an “Economic Competitive Assurance Program” to ensure parity between producers who are subject to the cap and trade program and those who are not, like importers. Finally, SB 775 would establish a program to deliver per capita dividends to all residents of the state – meaning that Californians would receive money from the program. SB 775 will require a two-thirds vote of the legislature.

In addition to this overhaul of the cap and trade program, Senate Pro Tempore Kevin de Leon recently introduced SB 100, which would increase renewable energy goals even further – to 50 percent renewable by 2026, to 60 percent renewable by 2030, and for 100 percent renewable by 2045.

CSAC recognizes the need for sustained leadership and commitment at the federal, state, regional and local levels to develop strategies to combat the effects of climate change, and supports a flexible approach to addressing climate change. We will keep counties apprised of developments on this legislation. Please contact Cara Martinson or Betsy Hammer with any questions.

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