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Welcome to our August archive of Essential Politics, our daily feed on California government and politics news. This year's legislative session closed out at the end of the month.

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State receives only a trickle of cash from cap-and-trade program

Mary Nichols oversees the cap-and-trade program as chairwoman of the Air Resources Board. (Carl Costas / For The Times)
Mary Nichols oversees the cap-and-trade program as chairwoman of the Air Resources Board. (Carl Costas / For The Times)

Cap-and-trade produced little revenue this month as demand for greenhouse gas permits remained lower than in the past, according to new figures from the California Air Resources Board, which runs the program. 

The results of the auction have been hotly anticipated in Sacramento, where lawmakers are debating the future of the state's climate policies

Although final details won't be available until next month, it's expected that revenue from the sale will be roughly $8 million, even weaker than the previous round in May.

Supporters of California's climate policies emphasize that revenue is not the only way to measure the success of cap-and-trade market for greenhouse gases. In addition, the overall demand for permits ticked upward from May to August.

But the money has become an important factor in the Capitol. Gov. Jerry Brown is relying on some of the cash to help fund the state's bullet train, and lawmakers have been angling to get a cut for projects in their districts. 

At the same time, the cap-and-trade program is facing significant legal and political hurdles. Without new measures to extend the state's targets for reducing greenhouse gas emissions — something that would be accomplished by passing Senate Bill 32 before the legislative session ends next week — it's unclear whether regulators have the authority to keep operating the program past 2020. 

There's also a lawsuit pending over whether cap-and-trade is an unconstitutional tax. None of the measures under consideration this month in the Capitol would address that issue, meaning legal uncertainty could continue to linger until the case is resolved by the courts.

The program functions by requiring companies to buy permits in order to emit greenhouse gases into the atmosphere, creating a financial incentive to clean up their operations. The permits can be bought during regularly scheduled auctions or traded on a market. 

This post has been updated with more details and context about the auction. 

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