It’s raining money! Or so Gov. Jerry Brown would have us believe. The new state budget assumes $2.2 billion in new revenue from California’s pioneering cap-and-trade program designed to help reduce greenhouse gas emissions.
But thousands of business and community leaders are concerned about the program’s economic impact on business and jobs, the state’s transparency, and regional distribution of that $2.2 billion and its demonstrable effect on helping boost local communities and critical sectors including affordable housing. Depending on whom you ask, many of those issues remain unresolved even as business has begun footing the bill.
The cap-and-trade program kicked in two years ago as part of the passage of landmark legislation AB 32, the California Global Warming Solutions Act of 2006. Simply put, the program is trying to reduce the state’s greenhouse gas emissions to 1990 levels by 2020 by selling a set number of emission allowances at state auctions. The allowances will decline annually until California’s emissions goals are achieved. Revenue from the program will come from greenhouse gas emitters – such as utilities, refineries, manufacturers and other businesses – that are buying the allowances to allow them to operate. Businesses can trade their surplus allowances to other businesses that find it difficult to reduce emissions through capital investment and other means.
So that projected $2.2 billion will actually be coming directly from utilities and businesses that must pay to emit greenhouse gases – and the state is now receiving actual revenue from this uncharted territory.
But early results and varying communications are confusing folks. Funding raised from the program is being purported to either help solve California’s affordable housing, infrastructure and transportation funding problems – or the costs to affected businesses will soon drive energy prices through the roof, which will lead to imminent job losses and bring economic growth to a halt.
Recently, BizFed Institute, a nonprofit, educational arm of the Los Angeles County Business Federation, also known as BizFed, convened a public forum at Woodbury University in Burbank that drew more than 100 business, community, academic and opinion leaders to discuss the complex challenges and opportunities afforded by the cap-and-trade program in California.
The forum’s expert panelists – which included Colleen Callahan, Luskin Center for Innovation at UCLA; Andrew Cheung, Southern California Gas Co.; Gary Gero, Climate Action Reserve; Dennis Luna, Luna & Glushon; Tiffany Roberts, Western States Petroleum Association; Ellah Ronen, LA n Sync, Annenberg Foundation; Richard Stapler, CA Natural Resources Agency; and Bob Wyman, Latham & Watkins (who was the moderator) – unanimously agreed that the future of cap and trade is largely uncertain given the Brown administration’s aggressive emission-reduction challenges and opportunities afforded by the program in California.
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