Capitol Alert

Climate change deal squeaks out of California Legislature despite gas price worries

An effort to extend California’s signature program for reducing greenhouse gas emissions to combat climate change cleared the California Legislature on Monday, sending the deal to Gov. Jerry Brown’s desk.

Senate Pro Tem Kevin de León called AB 398, which cleared the necessary two-thirds threshold in both houses, a “legislative unicorn” that brought together an unusual coalition of business organizations and environmental groups, among others rarely aligned at the Capitol. After weeks of intense negotiations, eight Republican legislators voted for the measure to ensure its passage.

The Senate leader described the measure as the most affordable method to reach the state’s ambitious goal of reducing greenhouse gas emissions to 40 percent below 1990 levels by 2030.

“Let’s demonstrate to our children, to generations to come, to the rest of the nation, to Washington as well as the world, that California will always be the leader when it comes to climate action,” de León said.

Sen. Anthony Vidak, R-Hanford, argued that California produces 1 percent of the greenhouse gas emissions on the planet, and that efforts to reduce climate change within the state’s borders are largely futile.

“We could shut down the entire state of California, and it would have absolutely no effect on the world climate,” Vidak said.

Sen. Tom Berryhill of Modesto, the only Republican to vote for the measure in the state Senate, said he made his decision after working with the governor to ensure that an extension of the manufacturing tax credit applied to the agriculture industry.

The California Farm Bureau Federation, Agricultural Council of California and other groups representing the farming industry wrote a letter in support of the bill on Monday.

“I’m a farmer by trade,” Berryhill said. “When my industry came to me and asked for help, I got it for them.”

Under California’s system, emissions are capped and polluters are required to obtain permits for the greenhouse gases they emit. Though companies can trade for more capacity through a state-run auction or on the private market, the additional cost is intended to create an incentive for them to reduce their carbon footprint.

Revenue raised from the auctions were originally meant for state projects to offset the effects of climate change, including hundreds of millions of dollars for the high-speed rail line under construction.

Republicans complained that the measure would increase gas prices and home utility bills.

The existing cap-and-trade program raised gas prices by 11 cents a gallon, the state’s Legislative Analyst reported last year. But estimates of how the current legislation might affect consumers has varied widely. It’s difficult to predict how much gas will cost in the future, let alone what share could be attributed to extending cap-and-trade.

Extending the program has been a legacy-defining priority for Gov. Jerry Brown in his final years in office. He appeared before a Senate committee last week, calling it the “most important vote of your life.”

But drumming up a two-thirds supermajority in the ideologically fractured Legislature, to insulate cap-and-trade from further legal challenges, required vastly expanding the scope of the deal.

Another measure, Assembly Bill 617, increases monitoring and penalties for local air pollution, an attempt to address concerns from progressive Democrats that poor and minority communities have been left behind in California’s fight against climate change. Both houses also approved a constitutional amendment Assembly Republicans introduced last week that would potentially give more them more say in how revenues are spent.

Weeks of intense negotiations also resulted in a promise to suspend the controversial fire prevention fee, detested by rural lawmakers whose constituents pay the $117 annual charge, through 2030; and amendments sought by industry groups, which gave political cover to business-friendly Democrats and Republicans to support the bill. Those include free allocations for emissions, a price cap on permits, a sales and use tax exemption for manufacturers and energy companies on equipment purchases and other expenses, limits on local air quality regulators, and an assurance that farmers will receive a significant chunk of auction revenue to upgrade their heavy-pollution equipment.

The deal is now supported by a wide range of business and environmental groups, though some major environmental organizations remain opposed becuase of the concerns that the cap-and-trade package is too friendly to industry interests.

State Senate President Kevin de León and Assembly Speaker Anthony Rendon last week suggested that a vote on a potential housing deal tied to cap-and-trade negotiations, could come as soon as this week. That’s now been pushed to late August.

“We look forward to finalizing this package upon return,” Brown said in a statement Monday. He, Rendon and de León said they have a “shared commitment” to addressing the housing shortage that has led to the worst affordabilty crisis the state has ever seen.

The joint statement said any package would include a permanent, annual funding source for affordable housing, a general obligation bond and regulatory reform, but did not detail specific proposals.

Alexei Koseff: 916-321-5236, @akoseff Angela Hart and Jim Miller contributed to this report.

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