We had such high hopes in April.
California recently collected nearly half a billion dollars under its new emissions trading system, which "caps" industrial greenhouse gas emissions and requires firms to obtain pollution permits for every ton of carbon they emit. The state's unenviable next task was to choose among all the worthy options to meet the law's requirement to invest those proceeds in projects that further the goals of AB 32, the state's landmark clean energy law.
On the table were a host of impressive near- and long-term projects to advance clean and efficient energy; more bikeable, walkable communities; mass transit; the weatherization of low-income homes; and the all-important job-training programs to enable low-income Californians to take part in our growing clean energy economy.
Then came last Tuesday's announcement that these investments will likely have to wait. The governor's May revised budget disclosed plans to divert $500 million in cap-and-trade auction proceeds to the general fund. This transfer would be a one-time loan to be paid back with interest.
The Brown administration's rationale is that it wouldn't be "fiscally prudent" to start investing these funds when income from future auctions can't be predicted.
The underlying premise may be true, but the stakes are too high for such a drastic maneuver.
California's pioneering low- carbon laws have placed this state at the vanguard of the emerging global clean energy industry; attracting billions of dollars in private investment and creating jobs during the great recession. The state has generated exceptional momentum and a clear path forward to accelerate its progress by investing in clean technology innovations to further reduce greenhouse gas emissions, as explicitly set out in AB 32.
That's why diversion of these investments for more than a year isn't prudent. Most of all, such action sends the wrong message while casting a dangerous pall of uncertainty over the state's clean tech investment and businesses planning and operations.
Our respective organizations represent thousands of California businesses employing tens of thousands of workers that are advancing the goals of AB 32 through the creation and deployment of pioneering clean energy technologies.
The arduous and thoughtful implementation process involved dozens of public workshops and hearings statewide with thousands of industries. Small businesses and community members weighed in and made it clear that they're counting on these dedicated investments according to the prearranged schedule.
What's more, ample projects already exist with the capacity to use the monies today, while reducing emissions, creating jobs and improving air quality statewide. Among those are programs to improve energy efficiency in transportation and buildings, which will deliver major short-term and long-term economic and environmental benefits.
We've witnessed from our eastern neighbors, the nine New England and mid-Atlantic states that make up the Regional Greenhouse Gas Initiative, that when states invest their permit proceeds promptly, they realize better and faster economic outcomes. Subsequently, these nine states are surging past California. An independent report on the Regional Greenhouse Gas Initiative's first three years, from 2009-12, found that these states reaped a total of $1.6 billion in economic growth, creating 16,000 jobs, and saving consumers $1.3 billion in energy costs, despite the economic downturn.
Many of those states made the strategic decision to shorten the time between collecting proceeds and disbursing them, positively benefiting their economies during a challenging financial period. California should follow suit, and ideally get back to leading the clean energy revolution and improving the air we breathe and the business opportunities we're generating. Retreat even a short-term one, with interest is a shortsighted option with long-term negative consequences.
Holly Smithson is president and COO of CleanTECH San Diego, a nonprofit formed in 2007. Susan Frank is director of the California Business Alliance for a Green Economy, a network of more than 1,250 businesses.