In a room once occupied by Republican Gov. Earl Warren, Jerry Brown toasted legislators from across the aisle at a recent climate luncheon in the stately Governor’s Mansion.
Republican lawmakers, the Democratic governor said emphatically, are an essential component of the coalition he needs to pass a bullet-proof extension of California’s cap and trade system, a complex, market-based program viewed as the linchpin of his climate change fight.
“I am very confident that the key to that objective are Republicans,” Brown told reporters.
Brown has made climate change the focus of his return to the governorship. He’s hammered Donald Trump for his withdrawal from the Paris accords and cast GOP climate skeptics as “troglodytes.” He’s just returned from China, where he held up the state’s environmental policies as a model for the world.
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Now he wants to convince two-thirds of the Legislature to keep a version of the program going beyond 2020. He believes he needs Republicans because he can’t count on all the votes from Democrats, including an influential bloc of business-friendly lawmakers. He has argued in the past that businesses should prefer to keep the system intact rather than face more stringent controls.
Brown’s negotiating moves at the Capitol in recent weeks underscore the lengths he is willing to go to maintain his state’s status as a global climate leader. Arriving at a compromise, however, has proven difficult.
Cautious lawmakers say privately they are not especially keen on sticking out their necks for a program many concede they don’t fully understand and that critics could cast as raising gas prices again.
Environmentalists fret that an eventual deal will be too friendly to the oil industry and impede the state’s ability to meet its aggressive greenhouse gas emissions targets.
Republicans say they want to be part of the solution, as long as costs for consumers and industry are kept down.
While early drafts of bill language circulate, the Brown administration stresses it’s continuing to work with everyone: legislators, environmental organizations, agriculture, business interests, groups worried about low-income communities that historically have struggled with pollution.
“We have to put the coalition together,” Nancy McFadden, Brown’s executive secretary, said in an interview Thursday. “Are we going to get all Republicans? Absolutely not. Do we want more than one or two? Yes. Are we going to get all moderate Democrats, whoever they are? No, probably not. And are we going to get all progressives? No. But we are aiming to get 54 (votes), or more.”
Cap and trade requires polluters to obtain permits for the greenhouse gases they emit as an incentive for companies to reduce their carbon footprint. Emissions are capped, and companies can trade for more capacity through a state-run auction or on the private market. The proceeds go to programs intended to reduce emissions. A portion of the revenue funds construction of Brown’s high-speed rail system.
With the program expiring in two years, Brown is seeking to renew the state-run auctions of carbon-emissions allowances, which include cement makers, food processors and others.
His challenge is immense. Climate analysts believe a plan must strike a balance between the state’s goals and the costs to achieve them, including how they’re allocated between consumers and industry.
Some liberal Democrats fear any deal will focus too heavily on the interests of the Western States Petroleum Association and not enough in favor of environmentalists and clean energy. A draft proposal circulating would preempt local air districts from imposing greenhouse gas regulation on oil and gas facilities and prohibit the state air board from adopting additional regulations on oil and gas production facilities in cap and trade.
“Why are we giving something away when who is going to benefit the most, who wants a market mechanism the most, is industry?” asked Assemblywoman Cristina Garcia, a Democrat from Bell Gardens.
She pointed to the industry’s lobbying to derail past climate change efforts, including last year’s Senate Bill 32, requiring the state to reduce greenhouse gas emissions to 40 percent below 1990 levels by 2030.
Garcia and nearly two dozen colleagues are advocating for an extension that supports improving air quality, limits or eliminates low-value offsets, does not artificially suppress the price on carbon and preserves the authority of the air board and air districts.
She said many environmentally minded lawmakers have made concessions by getting behind a cap-and-trade system rather than a carbon tax or another mechanism that would force cuts to pollution. Yet, she still feels like her district is being treated like a “wasteland” and her constituents are being made to feel “disposable.”
“We’re out there saying we’re beacons of hope for the world, but you go to my district, there’s no hope,” she said. “We have been left behind.”
Amid the concerns, the governor’s staff and legislative leaders are said to be working on an entirely separate air quality proposal for the Legislature to consider that likely would only require a majority vote.
In deal-making mode, Brown’s office confirmed the governor also gave his commitment to work on affordable housing legislation after being approached on the issue by about 25 progressive lawmakers. Assemblyman David Chiu, D-San Francisco, is leading an effort to find permanent funding, streamline the development process and hold local governments accountable for constructing more housing.
“We’re in the midst of the most intense housing crisis California has experienced and we need to act now,” Chiu said.
Brown’s office stressed that nothing is off the table. Officials there are pushing to get the deal done by the July 21 recess, but would like to do so even sooner so Rep.-elect Jimmy Gomez, a Democrat, could provide an extra vote before he’s officially sworn in to his House seat on July 11.
Asked where the Legislature is in the negotiations, Senate President pro tem Kevin de León said “the beginning stages.”
“I don’t believe in a deadline target,” de León said. “I think that when we can land a deal, we can land a deal, whether it’s a week, two weeks or when we get back. The trick here is to land a good deal that brings about agreement by all the parties.”
Pressure from outside business groups is intensifying.
Allan Zaremberg, president and chief executive of the California Chamber of Commerce, said his group is among those behind an online campaign that argues cap and trade is the most cost-effective way to meet the state’s pollution targets. If a deal isn’t reached this year, he said, it will be even harder to do so in 2018, an election year. After that, they may have to start from scratch with a new governor.
“The most important thing is to make sure the Legislature feels comfortable and the citizens feel comfortable with it,” he said.
A new website, Californians for Cap and Trade Now, is pressuring lawmakers to support the system while trying to define the issue in a positive light. And print newspaper ads by the Bay Area Council and Los Angeles Business Council feature Los Angeles Mayor Eric Garcetti, San Francisco Mayor Ed Lee, Sacramento Mayor Darrell Steinberg and the leaders of Fresno, Long Beach, Oakland and other big cities calling on Brown, de León and Assembly Speaker Anthony Rendon to come to an agreement on renewal.
“We cannot delay – our state’s leadership is needed more than ever,” the ads say. “We stand together in helping California lead the way.”
How a plan comes together may still hinge on the GOP-moderate Democratic segments Brown is working to unite. Assemblyman Adam Gray, D-Merced, said he wants to discuss whether money the system produces can be used to benefit regions and industries that are negatively affected.
“Every single dollar that’s been taken out of the community should be put back into the community,” he said, adding he doesn’t share Brown’s sense of urgency. “No deal is better than a bad deal.”
Assemblyman Frank Bigelow, R-O’Neals, said as a rural legislator, he’s concerned about how any cap-and-trade extension pact would affect the state’s agriculture industry, which leads the U.S. in farm receipts. Bigelow was part of a working group and met once with the governor. He suspects as many as 10 Republicans could ultimately back a deal, but stressed they aren’t there yet.
Concluded Bigelow: “Right now, it’s a solid zero.”