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California Legislature Passes Ambitious Greenhouse Gas Reduction Target, But Cap-n-Tax Program Remains in Limbo

The California Senate on 24th August passed legislation that extends the state’s greenhouse gas (GHGs) emission reductions to 2030.  SB 32, which passed on a 25 to 13 vote, gives statutory authority to Governor Jerry Brown’s (D) executive order mandating a GHG target of 40% below 1990 levels by 2030.  The Assembly passed the bill a day earlier by a 42 to 29 vote, so it will now go to the governor for his signature.

California’s Global Warming Solutions Act of 2006 (AB 32) mandated GHG reductions to 1990 levels by 2020.  That law is set to expire in 2020.  Passage of the new, much more ambitious target of 40% below 1990 by 2030 depended on agreement to pass another bill, AB 197, that requires the California Air Resources Board to order reductions in sources of GHGs that are near communities impacted most by air pollution or climate change.  This “climate justice” bill is a result of California’s cap-and-trade program, which allows large GHG emitters, such as oil refineries, to buy credits that allow them to maintain their emission levels from sources in parts of the state with lower air pollution levels.

The future of California’s cap-and-trade program is still being debated in the legislature.  The program has raised only a tiny fraction of the revenue projected when it was created.  For example, the latest cap-n-tax auction in May raised only $10 million.  Much of the expected revenue has been earmarked for various boondoggles, such as California’s bullet train project.  The rail authority expected $150 million, but received only $2.5 million. 

A California appeals court has been considering a two-year-old challenge to the cap-and-trade program on the grounds that it violates a constitutional amendment passed by voters as Proposition 26 in 2010.  The amendment requires that passage of new taxes and fees by the legislature be by a two-thirds super-majority vote.  The program was passed by a simple majority in both chambers prior to passage of Proposition 26, but failed to get two-thirds support.  There is currently majority support in the current California Assembly and Senate to re-authorize cap-and-trade, but not with the super-majority required.