What California should really do with cap-and-trade windfall

A truck drives into the Valero Benicia Refinery in July.
A truck drives into the Valero Benicia Refinery in July. AP

Starting with Thursday’s Senate budget subcommittee hearing, lawmakers can use a $1.4 billion cap-and-trade windfall to bring about important change in the lives and lungs of Californians, or they can squander it.

Lawmakers last month approved legislation extending the cap-and-trade program through 2030. Seeing that cap and trade will be a part of California for years to come, traders bought and sold permits to pollute at the August auction, delivering this most recent infusion to state coffers, a record haul.

The cap-and-trade auction delivered $640 million, on top of the $840 million already in the bank and not yet earmarked, to be doled out in the final weeks of this legislative session. It’s like Christmas in August.

In past years, lawmakers earmarked 60 percent of cap-and-trade money to the voter-approved high-speed rail, housing near transportation hubs, inner-city rail and low-carbon transit. The $1.4 billion is the remainder we’re talking about. Sen. Bob Wieckowski, D-Fremont, who chairs the budget subcommittee, wants to aim high by using some of the money to electrify commuter rail, a worthy effort in the fight against climate change.

“The investment needs to have a big impact,” Wieckowski told an editorial board member. He’s right. Alas, some legislators have lesser ideas.

Legislators have requested $10.5 million to open three fire stations in Contra Costa County; $1.5 million to turn Sonoma State Hospital into a park; $20 million for Delta wetlands restoration; $20 million to make farm irrigation more efficient; an unspecified sum for farmworker housing; $50 million for transportation in Inglewood, presumably to help people come and go from a sports arena to be developed later; and an amount to be determined to provide free shuttle rides in downtown San Diego using, what else, electric vehicles.

Altogether, legislators’ wishes released Wednesday totaled $3.6 billion, almost three times what’s available. If only Santa Claus existed, we’d endorse them all. We want the Delta restored, whatever that means, and we encourage greater efficiency in agricultural irrigation.

But cap-and-trade revenue is not free. We pay for it directly through 11 cents per gallon of gasoline, and indirectly through charges that corporate polluters pass to consumers. Rather than squander $1.4 billion on shiny environmentally correct objects, legislators should target the money where it would count most: transportation.

Cars, trucks, buses, trains and other modes of transportation remain the largest source of greenhouse gas emissions in the state. California long has issued rebates to people who buy zero-emission vehicles. That program has run out of money. It ought to be restarted and aimed at helping working people buy lower cost electric vehicles.

Diesel engines are especially harmful, creating smog, damaging lungs and emitting greenhouse gas. Why not set a goal of ending diesel pollution by, say, 2030?

The state already provides incentives for diesel engine owners to go green. If anything, that program should receive more money. Diesel-powered school buses should be exchanged for electric buses.

While they’re at it, legislators should find ways to encourage companies that directly or indirectly benefit from cap and trade to build or expand zero-emission auto, truck and bus factories in California.

We don’t endorse the sort of corporate welfare lavished by Nevada on Tesla to build its battery factory outside Reno. But California workers pay for cap and trade, and policymakers ought to find reasonable ways to favor companies that employ California workers.

Critics of cap and trade anticipate a boondoggle. Brown and legislators who support cap and trade have a great opportunity to prove that a green economy works, but only if they don’t blow it on narrow pork projects.