Brown backs cap-and-trade enabling language

Source: Debra Kahn, E&E reporter • Posted: Wednesday, August 17, 2016

California Gov. Jerry Brown (D) is still working with lawmakers to authorize state-run carbon auctions through 2030 in the waning days of the state’s legislative session.

Brown’s administration has offered language that would expressly extend the state’s cap-and-trade program through 2030, The Sacramento Bee reported yesterday. The language would amend S.B. 32, which as currently written would merely authorize overarching greenhouse gas targets, rather than a specific method of reaching them. The 2030 goal would be 40 percent below 1990 emissions levels, in line with an executive order Brown signed last year.

Brown spokeswoman Deborah Hoffman confirmed that the amendments have been proposed, but didn’t provide the language. “We won’t be telegraphing our strategy,” she said.

According to the Bee, the draft language instructs the California Air Resources Board to use its “authority under the California Global Warming Solutions Act of 2006 … including its authority for market-based compliance mechanisms, to meet a statewide greenhouse gas emissions target by 2030.” The 2006 law, A.B. 32, set an initial target of 1990 emissions levels by 2020.

The bill, by state Sen. Fran Pavley (D), passed the Assembly Appropriations Committee last week and now is headed to the Assembly floor. The last day of the legislative session is Aug. 31 (ClimateWire, Aug. 15).

Earlier this month, Brown signaled that he was open to waiting until next year or 2018 to authorize a 2030 target and reauthorize cap and trade, despite legal questions around the validity of the state-run auctions. He also raised the possibility of approving the extension via voter initiative (ClimateWire, Aug. 5). Legislative leaders similarly signaled that they might wait until the next session to try to pass the bill, which has come under opposition from oil industry representatives.

Due to the legal uncertainty, as well as an oversupply of credits, demand for allowances has recently plummeted, cutting into expected state revenues. The state’s next quarterly auction of cap-and-trade permits takes place today.

An industry suit is still pending against the auctions on the grounds that they are an illegal tax under Proposition 13, a constitutional amendment that requires a two-thirds vote to raise taxes. Explicitly authorizing cap and trade without a supermajority vote would similarly risk running afoul of Proposition 26, a 2010 amendment that requires a two-thirds vote to raise taxes or fees.

Pavley said last week that she thought the bill should pass with a simple majority vote. “Passage of S.B. 32 this year, which can be done by majority vote, will send an unmistakable signal to investors that California is committed to staying the course,” she said.