Although California’s cap-and-trade program was designed to combat climate change, a new analysis predicts it could also provide significant cash — as much as $8 billion in a decade’s time — for state and regional programs.
The report issued Tuesday by the independent Legislative Analyst’s Office projects a wide range of revenue generated by the sale of permits for companies to emit greenhouse gases beyond a state-ordered emissions cap. The most recent auction of those emission permits brought in more than $800 million.
The analysis warns that annual cap-and-trade revenue beyond 2020 is “highly uncertain,” and offers a possible range from $2 billion in 2018 to almost $7 billion in 2030 — the final year of the program under legislation Gov. Jerry Brown signed in July.
The estimate of $8.3 billion in 2027 is the high-water mark for any year in the report. Researchers cite a number of factors that make a specific prediction impossible, including future technology that allows industries to cut greenhouse gas emissions easily and thus pass on purchasing emission allowances.
“While it is clear that there will be additional revenues to the state beyond 2020, the amount that will be generated annually is highly uncertain,” the report reads.
Money collected from the sale of pollution permits is required to be spent on programs combating climate change. A portion of the money also is earmarked for the state’s high-speed rail program.
The report urges lawmakers to provide oversight for future decisions made by the California Air Resources Board, the agency that has taken the lead on climate change efforts. In particular, the analysts warn that allowing businesses to stockpile too many permits — ones bought at current low prices — could lead to excessive greenhouse gas emissions in future years, potentially even causing the state to miss its annual benchmark as soon as 2024.