Bill to extend state’s cap-and-trade system passes committee

RIVERSIDE – A Riverside County lawmaker’s proposal to extend the state’s cap-and-trade system – aimed at curbing greenhouse gas emissions – by another decade was approved late last week by a state Senate committee.

The passage of Assembly Bill 398 by the Senate Committee on Environmental Quality on a 5-2 party-line vote prompted warnings from Republican legislators that if the bill becomes law, Californians can expect higher prices for electricity and gasoline.

Assemblyman Eduardo Garcia, D-Coachella, wrote the bill to continue policies implemented under Assembly Bill 32, the Global Warming Solutions Act of 2006.

Chief among the provisions in AB 398 is replacing the Dec. 31, 2020, sunset date for operation of the state’s cap-and-trade compliance mechanisms, which would instead go until Dec. 31, 2030.

Sens. Jeff Stone, R-La Quinta, and Ted Gaines, R-El Dorado, cast the no votes in the committee.

Garcia has touted the need for “California … to lead the global charge on climate.”

Garcia said AB 398, along with its companion bill, Assembly Bill 617, “establish a comprehensive, statewide program to keep us on track to achieve our climate goals, all while retaining industry jobs, ensuring equity, addressing vital issues of air quality and public health issues in disadvantaged communities severely impacted by pollution.”

AB 617 calls for a system under which fixed sources quantify and report their emissions and face criminal penalties for certain environmental violations.

Gov. Jerry Brown has already stated his support for the proposals and appeared with Garcia during the committee hearing to reinforce his approval.

The cap-and-trade program relies on a quasi-market system in which carbon credits and allowances are sold and exchanged, mostly by entities doing business in California, including oil refiners, producers and transporters, as well as utilities and manufacturers.

Businesses can purchase a limited number of credits and bank them, or alternately document that they’ve used clean technologies or shed polluting components to “offset” their carbon footprints and comply with California Air Resources Board regulations. One purchasable emission unit is defined as a metric ton of carbon dioxide equivalent.

“This bill will raise gas prices,” Stone said. “It will increase utility costs. It will cost small businesses and taxpayers billions of dollars a year so the state can pay for pork projects like the governor’s high-speed choo-choo train to nowhere.

“We all want clean air and clean water. We are all environmentalists, but this bill saddles the working poor and the middle class with higher taxes and higher utility costs. It seems that this bill’s true goal is to drive jobs out of California – which would certainly have the effect of reducing greenhouse gas emissions.”

Opponents of the cap-and-trade system – the only one of its kind operated by a single state in the union – argue that it saddles consumers with higher costs that are passed on by the companies required by law to participate in it.

Critics point to cap-and-trade as one reason for California’s higher pump prices.

According to Gaines, the cap-and-trade extension could not come at a worse time, with Californians set to pay 12 cents more per gallon for gas after Nov. 1 due to Senate Bill 1, the Road Repair and Accountability Act of 2017, which also increased taxes for diesel fuel and added an average $38 more per year for vehicle license fee renewals.

“This cap-and-trade extension could add about another 73 cents a gallon on top of that,” Gaines said. “While the rest of the country is paying $2 a gallon for gas, we are going to be paying a dollar-and-a-half a gallon just in taxes and climate fees.”

According to a Senate Environmental Quality analysis, cap-and-trade has generated $3.4 billion over the last four years.

That money has been disbursed to a dozen state agencies for a variety of earmarks, including affordable housing projects, the High Speed Rail Project and subsidies, which the California Air Resources Board insisted must bear a relationship to greenhouse gas emission reduction.

AB 32 sought to reduce the greenhouse gas output in California to 1990 levels, which analysts said has already been achieved.

Follow-up legislation, Senate Bill 32, revised the cap to 40 percent below the 1990 levels by 2030. The electrical grid is one target of regulators.

The Senate committee analysis noted deficiencies in the cap-and-trade system and the overall regulatory framework of AB 32.

According to analysts, the process suffers from “leakage,” or the act of reducing emissions in California by pushing entities that generate the same level of greenhouse gases into other states.

The analysis also characterized cap-and-trade as “a low carbon tax, rather than a mechanism to drive down greenhouse gas emissions” because the California Air Resources Board does not actively engage in enforcement measures.

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