The Legislature will begin discussions in its first week back from recess on how to spend proceeds from California’s Cap-and Trade auction, the program that requires certain large greenhouse gas emitters to either purchase carbon credits or take measures to reduce their emissions to meet a set emissions cap. Both the Senate and the Assembly have budget subcommittee hearings set next week to discuss Cap-and-Trade expenditures, the first of such hearings in the wake of the contentious July extension of the Cap-and-Trade auction program through 2030.
The extension of the program by a two-thirds vote in the Legislature was one of Governor Brown’s primary priorities for 2017, as the Cap-and-Trade auction was set to end in 2020 as a provision of the California Global Warming Solutions Act signed in 2006 by Governor Arnold Schwarzenegger. The program has been the target of litigation by industry as an unconstitutional tax, and a two-thirds ratification of an extension theoretically extinguishes the legal challenge. The Governor and Legislature, including a number of Republican members, negotiated and passed what many feel is an industry-friendly extension of the program in July. Notably for RCRC counties, the extension eliminates the State Responsibility Area fee permanently and backfills the fund from Cap-and-Trade auction proceeds through 2030.
With the extension accomplished, the Legislature and Administration must now settle on how to spend auction proceeds for the 2017-18 budget year. RCRC has already been advocating for significant funding for healthy forest programs to alleviate wildfire risk and aid in tree mortality mitigation, both issues which are directly related to climate change and greenhouse gas emissions and sequestration, as well as continuing to ask for a modified definition of disadvantaged communities that will allow more rural areas to compete for targeted Cap-and-Trade dollars. An expenditure plan is expected to be finalized before the end of the legislative session in September.