In advance of a political showdown in the state Legislature, Gov. Jerry Brown's administration made its first formal effort Tuesday to extend the life of the program central to California's bid to combat climate change.
Cap and trade functions by forcing companies to buy permits in order to pollute, providing a financial incentive for power plants, oil refineries, manufacturers and other businesses to reduce their emissions. Money from the program finances high-profile projects, such as the state's bullet train and electric car subsidies, alongside other efforts to cut pollution, particularly in disadvantaged communities.
The new plan would provide stronger links to similar programs in Canada, better align with federal clean power standards and give the state a mechanism to meet Brown's aggressive greenhouse gas reduction targets through at least 2030, according to a report from the board.
"Despite California's marked progress, greater innovation and effort is needed to avoid the worst consequences of climate change," the report said.
The plan released Tuesday represents somewhat of an insurance policy in case the governor and lawmakers fail to reach a deal next month that would cut through the many political and legal challenges facing the cap-and-trade program.
Brown wants new legislation to extend cap and trade beyond 2020 and is negotiating with oil companies, as part of an expected major debate over the issue when the Legislature returns from recess in August. An extension of the cap-and-trade program might also require approval from two-thirds of lawmakers, the threshold required to approve new taxes. Doing so would insulate cap and trade from pending legal arguments that contend it's currently an unconstitutional tax because the original 2006 law to authorize the program only passed with a majority vote.
Clearing any legislative hurdle is a tall order, with previous efforts to expand the state's climate change programs opposed not only by Republicans, but also business-aligned Democrats in the Assembly. Should a new law not pass, the plan released Tuesday formalizes Brown's intention to continue cap and trade, albeit with lesser legal certainty.
Senate President Pro Tem Kevin de León (D-Los Angeles) praised Brown and the Air Resources Board for moving toward continuing cap and trade, but said the Legislature also needs to act.
"The governor is doing his job," De León said after a Tuesday news conference in Sacramento to tout the clean energy industry. "Now it's time that the Legislature do its job by making sure that we bring predictability, that we stabilize the markets, that we continue to invest in vulnerable communities throughout the state of California."
Beyond the political and legal wrangling over cap and trade, the program has faced financial problems. The cap and trade auction in May produced only $2.5 million in revenue instead of the $150 million that state officials had expected. Tuesday's plan aims to create greater certainty for investors about the climate program's future.
The 14-member Air Resources Board – all but two are appointed by Brown – must still sign off on the cap-and-trade extension before it takes effect. A final vote is expected in spring 2017.
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Times staff writer Patrick McGreevy contributed to this report.