Editorials

Lawmakers enjoy windfall, but for how long?

A tanker truck passes the Chevron oil refinery in Richmond in 2010. State law requires that California reduce greenhouse gas emissions to 1990 levels by 2020 and forces heave carbon emitters to buy offsets in the cap-and-trade market.
A tanker truck passes the Chevron oil refinery in Richmond in 2010. State law requires that California reduce greenhouse gas emissions to 1990 levels by 2020 and forces heave carbon emitters to buy offsets in the cap-and-trade market. Associated Press file

By the billions, California’s cap-and-trade experiment is putting the green into greenhouse gas.

Gov. Jerry Brown proposes spending $2.23 billion of the windfall. The Assembly adds to that, hoping to spend $2.4 billion. The Senate would spend $2.7 billion in the fiscal year staring July 1.

But sooner rather than later, lawmakers should confront a fundamental question: Will cap-and-trade revenue keep rising, or skid to an abrupt halt?

California law requires a two-thirds vote of the Legislature to approve taxes. Lawmakers passed Assembly Bill 32, the 2006 legislation that created cap and trade, by a simple majority vote.

The California Chamber of Commerce is suing, arguing that cap-and-trade revenue is a tax. The California Air Resources Board, which oversees cap and trade, says it’s not a tax. What it is, if not a tax, isn’t clear. The California Court of Appeal in Sacramento is sorting that out. A chamber victory could unravel California’s cap and trade as currently practiced.

AB 32 requires that California reduce greenhouse gas emissions to 1990 levels by 2020. The law doesn’t answer what happens beyond 2020. Senate Bill 32 by Sen. Fran Pavley, D-Agoura Hills, and AB 1288 by Speaker Toni Atkins, D-San Diego, would extend the original bill by requiring further greenhouse gas reductions, and, presumably, continuing cap and trade beyond 2020.

But doubting Republicans would provide sufficient votes to reach a two-thirds majority, the Democratic-controlled Legislature proposes to pass the bills by simple majorities. In other words, lawmakers could be testing the limits of majority-vote power, and inviting additional litigation.

That issue is for another day. As early as Wednesday, the Senate-Assembly budget conference committee will begin taking up competing cap-and-trade spending plans. For every notion about how to spend the $2 billion-plus, there is a lobbyist, or maybe 10.

Brown seeks $500 million in the coming year for high-speed rail, his favored project. He’ll get that; he is the governor.

Senate President Pro Tem Kevin de León proposes directing $500 million to regions that suffer most from pollution, including the Central Valley, and urban Los Angeles, which he represents.

Exactly how the money would be spent is to be determined. But the $500 million could subsidize solar panels at homes of people who cannot afford them, weatherproof older homes, replace heavily polluting diesel engines in rural areas, and help low-income people buy high mileage vehicles. De León’s desire to direct money to poorer parts of the state is appealing, since green energy subsidies generally flow to wealthier coastal California.

The Senate wants to infuse a “green bank” with $25 million, to make low-interest loans for green energy projects. Silicon Valley likes that. The Assembly seeks millions for power plants that generate energy from farm, dairy and logging waste. Farm and forestry interests like that.

One caveat is that the money must be used to reduce greenhouse gas emissions. Some proposals seem like a stretch, such as an Assembly proposal to spend $4 million for mosquito abatement.

Before lawmakers grow too accustomed to cap and trade, they will need to grapple with basic questions: Is it legal, how should it be extended, and will cap and trade continue to defy gravity?

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