Gov. Jerry Brown unveiled a re-envisioned cap-and-trade proposal, one aimed at winning support from Republicans, Democrats, industry and environmentalists. As in any compromise, no one gets everything they covet.
Although California’s cap-and-trade program won’t expire until 2020, the governor wants to extend it now, before the next auction scheduled to take place in August, and before his tenure winds down next year.
He made clear the stakes, as he sees them, telling an editorial board member that doing nothing would cause the existing program to wither. Failure to act would be “a tragedy,” he said.
We wouldn’t go that far. But bills headed for votes this week contain important elements worthy of support.
In Brown’s proposal, no one gets everything, and everyone gets something. That’s called compromise.
Legislators will hold hearings on the two-bill package on Wednesday, and both houses will vote on the measures as early as Thursday. Approval by a two-thirds majority is needed, though by no means assured.
Legislators last year approved Senate Bill 32, which set the ambitious goal of reducing greenhouse gas emissions in California to 40 percent below 1990 levels by 2030. Knowing that reaching such levels will be tough, the governor, legislators and others who fashioned the proposal sought to limit economic disruption.
Under the proposal, AB 398, the California Air Resources Board, already among the most powerful entities in the state, would gain greater power. The board could impose a ceiling on the levies imposed on polluters, a step intended to limit price spikes.
The bill would continue a sales tax exemption on new manufacturing equipment until 2030, a smart step regardless of whether cap and trade is extended. That would ease the cost to industry of installing emission control equipment, as required by the legislation.
Industry could comply with mandated reductions by, say, buying forest land in Michigan. Over time, more of those offsetting purchases to fight climate change would need to take place in California, an improvement over the current program.
In another provision intended to gain oil industry support, but which alarms some environmentalists, local air districts would lose authority over greenhouse gas emissions from refineries.
To win support from urban Democrats, one of the bills, AB 617, seeks to clean the air in the worst basins. To gain Republican support, Brown proposes to suspend a tax he pushed in 2011 on people who live in fire-prone areas to help pay for fire fighting and suppression efforts. Rural residents bristled at it, and it has been the target of lawsuits.
An issue not addressed is how to offset costs paid by lower-income Californians. We all pay about 11 cents more per gallon because of the cap-and-trade program, and probably will end up paying more in years to come. Lawmakers should find ways to ease the impact of the fight against climate change on people who earn little.
Although reductions attributed to the cap piece of the program have been minimal to date, revenue generated by the trade part has been ample, at $4 billion and counting. The legislation leaves open how much of the money would be spent, the better to win over hold-out legislators. But 60 percent would be earmarked for transit, housing, and high-speed rail, an important project for the state. Brown wants to stabilize its funding so the next governor won’t back away from it.
Some environmentalists hope for direct taxation of carbon. But the Legislature is not about to approve a carbon tax, and industry, with its influential lobbyists, much prefers a market-based system to achieve reductions intended to combat climate change, and would fight direct regulation.
In Brown’s proposal, no one gets everything, and everyone gets something. That’s called compromise. It’s how reasonable policy gets done.