Is California's Cap-and-Trade Program in Trouble?

A natural gas–fired power plant in Long BeachEXPAND
A natural gas–fired power plant in Long Beach

Early this month, on the same day that President Donald Trump announced he was pulling the United States out of the Paris climate agreement, the California State Assembly voted on a bill of its own, designed to fight climate change. AB 378, authored by Southeast L.A. County Assembly member Cristina Garcia, would have updated the state's cap-and-trade program, imposing new limits on individual factories and polluters. The ambitious proposal was narrowly defeated by four votes, despite the fact that Democrats have a supermajority in the assembly.

After the vote, newly elected Assembly member Laura Friedman, who represents Burbank, Glendale and parts of L.A., blasted the moderate Democrats who joined Republicans in voting against the bill. Friedman posted on Facebook:

Tonight the California Legislature caved in to big oil and refused to extend its trailblazing cap & trade program. We needed 41 votes and fell three short. Incredibly ironic timing considering today's announcement about the Paris Accord. Rhetoric means nothing without action.

"As we’re berating President Trump for loosening environmental regulations, we missed an opportunity," Friedman tells L.A. Weekly. "I don’t think this is the time to be wishy-washy."

This week, state legislators are busy putting the final touches on the $183 billion budget, which conspicuously does not include any provision to extend the state's cap-and-trade program past its current 2020 deadline.

The cap-and-trade program, the first of its kind in the United States, was passed in 2006 and went into effect in 2012. It essentially puts a limit on the volume of greenhouse gas emissions a polluter is allowed to release. The polluter — a factory, say, or an oil refinery — can either cut emissions, finance offsets (for example, planting a bunch of trees) or purchase carbon credits in a state-run quarterly auction.

The program is set to expire in 2020, though there's a bit of disagreement over whether it needs to be extended by the Legislature, or if it can be done by the California Air Resources Board, which runs the program.

Either way, Gov. Jerry Brown has said that he wants lawmakers to extend the program before their July vacation. He also wants it passed by a two-thirds supermajority, in order to inoculate it against future legal challenges. The Chamber of Commerce has sued over the program, saying it constitutes a tax and therefore requires a two-thirds vote; California's Supreme Court is expected to take up the matter later this year.

In a written statement, Governor Brown said: "In order to be effective and deal with climate change, we need to strengthen our cap-and-trade program, and I'm very hopeful we can get that done. It's not done yet and it does take votes — it takes a two-thirds vote — so that's quite a challenge, but I'm going to do the best I can to get it done.”

But working out a deal is going to be complicated. There are myriad factions, all with different concerns. Brown wants a deal, wants it fast, and wants it to be two-thirds. A clique of moderates wants more oversight of the program. A clique of progressives wants the issue of environmental justice — the question of exactly where pollutants are released into the atmosphere — addressed.

"It seems like multiplayer chess with a bunch of people on the sidelines," says Erica Morehouse, a senior attorney with the Environmental Defense Fund.

A few different cap-and-trade bills were authored this year, but only one, Garcia's, has made it to the Assembly floor for a vote. Garcia's bill would have placed limits on individual polluters, barring them from participating in any offset program if they failed to meet certain standards — standards that have little to do with greenhouse gas emissions, per se, or even climate change, and more to do with air quality. Garcia and other environmental justice advocates have pointed out that big polluters are far too often located in poorer areas. Instead of forcing them to pollute less, the cap-and-trade program gives them the option of buying offsets far from the places where they do their polluting — preserving forests in scenic Northern California, for example.

Actually, progressives were always a bit "meh" on cap-and-trade, which is one of those economist-approved, market-based solutions. Though cap-and-trade generates revenue and is designed to become more restrictive over time, progressives would have preferred harder limits to emissions that companies couldn't buy their way out of.

Garcia's bill failed for a couple of reasons. Indeed, oil companies did lobby against it (they like cap-and-trade just fine as it is), as did a couple of unions. But some Democrats have been feeling jittery ever since they approved a 12-cent gas tax hike to pay for road maintenance. That move was not popular in certain parts of the state. One state senator, Josh Newman of Fullerton, is even facing a recall election, largely because of his gas-tax vote. And so moderate Democrats — or New Dems, as they're trying to get everyone to call them, without much success — are reluctant to pass another law that hurts the oil industry and, they say, raises the price of gasoline.

“Nobody will follow a system that asks our poorest communities to make the greatest sacrifices,” said Assemblymember Raul Bocanegra — who voted no on Garcia's bill — in a written statement. “We must take this opportunity to develop a sustainable climate policy framework that will reach our greenhouse gas emissions targets in the most thoughtful way for everyone.”

The moderates only want to extend cap-and-trade until 2025, so they can review the program then. They also want the program to have greater oversight. And they definitely don't want any limits on which companies can purchase offsets.

Will the Democrats be able to come up with a compromise, one that essentially gets all of them on board? Probably not in the next few weeks, though anything is possible. A deal in late August is a bit more likely, but will probably be a lot less stringent than what progressives like Garcia and Friedman want.

"I’d be surprised if we see something that offers the same level of protections that [Garcia's] bill did," Freidman says. "I assume that whatever passes will be watered down. Which will be unfortunate."


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