California governor wants cap-and-trade deal by June

San Francisco, 12 May (Argus) — California governor Jerry Brown (D) says there is a “very good chance” state lawmakers will pass legislation next month to extend the state’s greenhouse gas cap-and-trade program.

The number of supporters of California’s carbon market is growing as lawmakers realize that funding for local projects is at stake, Brown said yesterday after releasing his revised 2017-18 budget plan.

“I do not think we should turn our backs on the low-income communities in California by destroying millions and millions of dollars they are now slated to get,” Brown said.

By emphasizing that cap-and-trade dollars go to public transit, home weatherization and other initiatives, Brown hopes to address the concerns of environmental justice advocates who have criticized the program for not doing enough for disadvantaged communities.

The governor has pushed the legislature to agree on a bill by June 15, the deadline for passing the state budget.

Brown’s budget, updated from an earlier January version, would still withhold an estimated $2.2bn in revenue from the state’s quarterly allowance auctions. Brown hopes that will sway enough Democrats to reach a two-thirds majority vote that would help shield cap-and-trade from legal challenges.

But Brown said he “does not rule out” trying to gain the support of Republicans, who in recent weeks have expressed interest in joining talks over the legislation.

Meeting Brown’s June deadline could be difficult given the negotiations that lay ahead. The leading cap-and-trade proposal in the Assembly, AB 378, leaves most of the program intact, but would add new requirements for reducing emissions that contribute to local air quality problems. The Senate bill, SB 775, proposes a more significant overhaul, such as eliminating the use of offsets and free allowance allocations. It would also set minimum and maximum prices for the state’s allowance auctions.

Senate president pro tempore Kevin de Leon (D) downplayed the differences, noting that both sides agree on the larger question of reducing GHG emissions.

“Our best bet is to stay the course we are on with some adjustments to make sure we protect consumers, keep the market stable and reach our targets,” he said.

California has set a goal of reducing emissions 40pc from 1990 levels by 2030. The current program is designed to bring emissions down to 1990 levels by 2020.

Now is the right time for Brown to make a strong push, according to Chris Busch, research director at the clean energy advisory firm Energy Innovation.

“Uncertainty around the program is certainly hindering investment and depressing sales at auction,” Busch said. “The differences between the legislative proposals are there, but I think they are both taking symmetric steps of increased local stringency paired with stronger high side price controls.”