Pending litigation may hinder Gov. Jerry Brown's cap-and-trade program

By Deana Carpenter | Aug 10, 2016

SACRAMENTO – The California Air Resources Board is expected to vote next year on whether to extend the state’s cap-and-trade program to 2030.

SACRAMENTO – The California Air Resources Board is expected to vote next year on whether to extend the state’s cap-and-trade program to 2030.

Gov. Jerry Brown wants to make sure the climate-change program, which works to reduce the use of fossil fuels by making businesses and industries meet tougher limits on emissions, is in place after he leaves office in two years. The cap-and-trade program, which began four years ago, is currently authorized to operate until 2020.

Under the program, manufacturers exceeding the emissions limits must pay a fee. It is one or the more aggressive efforts to combat climate change in the country.

The program does come with some challenges, which include a lawsuit over its legality, poor sales of credits as well as not much support among fellow Democratic legislators to extend it.

Sophia Taft of the Association of General Contractors of California (AGC) said the organization does not have a specific position on the overall cap-and-trade program.

“We have supported cap-and-trade revenues resulting from the sale of greenhouse gas emission credits to fund transportation construction projects,” Taft told the Northern California Record.

The program was born under former Gov. Arnold Schwarzenegger, who was a Republican. It helped cut California’s emissions by 1.5 percent during its first two years.

The AGC’s support has included annual appropriations of $500 million for construction of high speed rail.

“However, less than expected revenues from the last cap-and-trade auction have placed that funding in debt,” Taft said.

The California Chamber has a lawsuit pending that would challenge the cap-and-trade auction and require a two-thirds vote by the legislature to continue the program.

The Chamber contends that the credit program is a tax that is illegal, not a fee.

Other environmental groups contend the lawsuit and uncertainty of the program itself is hurting the market for pollution credits. In May, at an auction of credits, companies bought about one-tenth of those available, which meant the state was short of revenue in the billions of dollars.

“Gross polluters are the ones who purchase credits through the cap-and-trade auctions. We are not aware that any AGC members participate in that process,” Taft said.

Christine Haddon of the Chamber said after speaking with its policy expert on the matter, the Chamber has not positioned itself on the governor’s proposed extension.

“We should have something in a few weeks,” Haddon told the Northern California Record.

The program also states that oil companies are required to reduce the amount of carbon in gasoline in other fuels by 10 percent by 2020 - up from the 2 percent reduction in place now.

Non-binding mandates have been set by brown to increase the use of solar, wind and other renewable energy sources in California in the coming years. He also has signed accords and support statements globally in efforts to ease climate change.

The California legislature is expected to discuss the future of the cap-and-trade program when it returns in late August.

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Organizations in this Story

California Air Resources Board California Chamber of Commerce

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