SACRAMENTO — A years-long lawsuit challenging how California
companies pay for the greenhouse gases they emit in the state’s
cap-and-trade program is staging a comeback despite the program’s
future remaining unsettled.
In 2012, the California Chamber of Commerce filed a lawsuit
seeking to have the state’s emissions-trading system, known as cap
and trade, deemed an illegal business tax. According to the suit, the
California Chamber of Commerce and Morning Star Packing Co., a
tomato-processing company, stated that the quarterly auctions run by
the state amount to an illegal tax, which requires new taxes to be
approved by a two-thirds vote of the Legislature to take effect,
according to report by KQED
report, the suit is not challenging the
entire cap-and-trade program, but rather the method by which
California distributes its greenhouse-gas permits. As the San
Francisco Chronicle reported,
during most of 2016 many companies appeared to be boycotting the
state’s cap-and-trade program. Furthermore, during its May
quarterly auction of greenhouse-gas permits, it was reported that
only 11 percent had been sold. However, this number jumped up to 88
percent during the last quarterly auction last year on Nov. 15.
As KQED Science reported, the auctions for the greenhouse-gas
permits have become a lucrative source of funding, with the billions
of dollars generated going toward construction and energy
Yet while the cap-and-trade program may have finished relatively
strong compared to the beginning of the year, the program’s
long-term future remains unsettled.
The program's critics and the state’s Legislative Analyst’s
Office claimed that it does not possess the legal authority to go
past 2020, according to the Chronicle report. The California Air
Resources Board, which is the state agency that handles much of
California’s global-warming prevention efforts, disagreed with
these arguments and intends on keeping the program running for the
next 10 years.
However, lawmakers have already extended the cap-and-trade system
beyond 2020, as stated in KQED
Science report. Gov. Jerry Brown, who is
working on tackling climate change as part of his legacy, had been
lobbying to lawmakers to preserve the program. Brown has asked
lawmakers to approve the extension to protect it from legal
When the Legislature passed Senate Bill 32, the Chronicle
reported, it required the state to cut its greenhouse-gas emissions
to 40 percent below 1990 levels by the year 2030. Signed into law by
Brown, it does not state how California should cut its emissions.
However, supporters of the bill believe that the cap-and-trade system
is one choice.
“Most of the market is reasonably confident about the
continuation past 2020,” Harry Horner, head of analysis for
While the lawsuit has not terminated the cap-and-trade program, it
is possible that the suit could change some elements within it, the
Chronicle report added.