Revenues from the latest auction of carbon credits to comply with California's Cap-and-Trade program dropped steeply from November's more encouraging totals, renewing uncertainties surrounding the future of the program.
Since inception, the program has typically netted more than half a billion dollars in each quarterly auction, padding the State's Greenhouse Gas Reduction Fund for expenditures that have largely benefited urban areas and the High Speed Rail project. However, 2016 saw a sharp decline in State auction revenues, with $10 million collected in May, and $8 million in August. November's $365 million haul had supporters optimistic that the program was back on track, but the latest anemic numbers could spell trouble for the auction's future.
California's Cap-and-Trade program has been the subject of controversy since its inclusion in the California Global Warming Solutions Act, commonly referred to as AB 32. Many industries subject to the program have questioned its legality, with the program currently under legal challenge from the California Chamber of Commerce as a de facto tax. The program is also set to end in 2020, but Governor Brown is asking the Legislature to extend the auction through 2050 and codify the program by a 2/3 vote, which would essentially nullify the lawsuit and theoretically eliminate the uncertainty surrounding the program.
The full report on the February Cap-and-Trade revenues can be accessed here.