Cap & Trade bill bound for Governor’s desk

By Paul J. Young – City News Service

A Coachella legislator’s bill to extend the state’s cap-and-trade system requiring utilities, fuel suppliers and others to purchase credits aimed at curbing polluting activity will likely be signed by Gov. Jerry Brown within a week — despite opponents’ criticism that it will further ratchet up gas and electricity prices statewide.

After the California Assembly and Senate on Monday barely netted the two- thirds vote margins needed to send Assembly Bill 398 to the governor’s desk, Brown hailed it as a triumph, declaring the Legislature had acted to “boldly confront the existential threat of our time.”

AB 398, introduced by Assemblyman Eduardo Garcia, D-Coachella, will continue policies implemented under AB 32, the Global Warming Solutions Act of 2006. AB 398 replaces the Dec. 31, 2020, sunset date for operation of the state’s cap-and-trade compliance mechanisms, which will instead remain in place until Dec. 31, 2030.

A companion measure, AB 617, requires fixed sources to quantify and report their emissions’ impact on certain communities or face criminal penalties.

“These legislative proposals will accelerate California to the next critical step in our global climate leadership,” Garcia said.

He said AB 398 and AB 617 complement legislation approved last year to establish statewide programs for achieving “ambitious climate goals … while ensuring the market stability necessary to retain industry jobs and address vital public health and air quality issues.”

Sen. Richard Roth, D-Riverside, said the legislative package would “help us continue to improve our region and state’s air quality while providing key stakeholders and industries with the flexibility they need to meet our shared clean air goals.”

He said he is confident the bills will “ensure we continue to make measured, positive strides towards improving our state’s public health for decades to come.” Assemblyman Jose Medina, D-Moreno Valley, also voted in favor, while Assemblywoman Sabrina Cervantes, D-Corona, abstained, saying that while she believed “climate change is real” and a threat, the legislative package was a “missed opportunity,” failing to directly address “harmful air pollution …from consumer and commercial vehicles.”

Assemblywoman Melissa Melendez, R-Lake Elsinore, lambasted the legislation as a burden on Californians “living paycheck to paycheck.” “They are living with the anxiety that they will not be able to afford next month’s utility bill or have enough money to fill their gas tank,” she said. “These are the same people the Democrat majority claims to protect; nothing is further from the truth.”

Sen. Mike Morrell, R-Menifee, said his vote against AB 398 was not a vote against the environment, but a vote against increasing “our gas taxes by as much 73 cents per gallon, raising the cost of electricity, and further
harming our economy by jeopardizing the financial security of millions of families.”

“Individuals should be able to keep more of their hard-earned money so that they can invest in their futures — not fund big government priorities like the governor’s High-Speed Rail Project,” the senator said.

Sen. Jeff Stone, R-La Quinta, agreed, asserting the measures represented “nothing more than a huge tax increase on California’s working families, who will now have to choose between gasoline and food while making the coastal elites who fly around the world in their private jets, talking about global warming, feel good about themselves.”

Several Republicans crossed the aisle to cast votes in favor of AB 398, including Assembly Minority Leader Chad Mayes, R-Rancho Mirage, and Sen. Tom Berryhill, R-Twain Harte.

Some supporters touted the legislation’s indefinite suspension of the fire prevention fees charged to property owners who reside in Cal Fire state responsibility areas. Lawsuits are pending against the fees, which critics
deride as an illegal “fire tax.”

The cap-and-trade program relies on a state-managed auction in which carbon credits and allowances are sold and exchanged 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.

Opponents of the nation’s solitary cap-and-trade system argue that it saddles consumers with higher costs passed on by the companies required to participate in it. A letter to the governor signed and sent last week by a number of Republican lawmakers expressed concern that cap-and-trade will push pump prices up 63 cents per gallon by 2021, and 73 cents per gallon by 2031.

According to Stone and others, 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 & Accountability Act of 2017, which also increased taxes for diesel fuel and added an average $40 more per year for vehicle license fee renewals.

AB 398 contains tax rebates for plug- in hybrids, including $100,000 Teslas.

According to a Senate Environmental Quality Committee 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 CARB insists 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, SB 32, revised the cap to 40 percent below the 1990 levels by 2030. The electrical grid is one target of regulators.

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LEGISLATION AUTHORED BY VALLEY ASSEMBLYMAN EDUARDO GARCIA

The passage of Assembly Bill 398 by the Senate Committee on Environmental Quality on a 5-2 party-line vote Thursday 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, authored the bill to continue policies implemented under AB 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, AB 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 today’s committee hearing to re-enforce 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 & 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 CARB insists 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, SB 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 GHG emissions” because the CARB does not actively engage in enforcement measures.