California’s Governor Gavin Newsom has put forth a groundbreaking proposal to extend the state’s cap-and-trade program for greenhouse gases by 15 years. This initiative, a key component of California’s climate policies, not only aims to combat climate change but also serves as a significant revenue source for the state.
Reauthorization and Modifications
Newsom’s plan, as reported by POLITICO, includes the reauthorization of the quarterly auction of emissions permits with some notable changes in how the generated proceeds will be utilized. One crucial aspect of the proposal is the adjustment in funding allocation for the state’s high-speed rail project, moving from a 25% earmark to a guaranteed minimum annual funding of $1 billion.
In a bold statement, Newsom asserted, “California won’t bend the knee to a federal administration hellbent on making America polluted again.” He emphasized the importance of the ‘cap-and-invest’ strategy as a pivotal tool in improving air quality and safeguarding community well-being.
Program Expansion and Revenue Impact
Besides seeking an extension till 2045, Newsom aims to rebrand the existing program as ‘cap-and-invest,’ aligning it with similar initiatives in Washington and New York. While Washington’s market is set to launch in 2023, New York’s plans have faced delays.
The cap-and-trade program, set to expire in 2030, has been a substantial revenue generator for California, with annual revenues of approximately $4 billion. However, uncertainties surrounding its future have led to a decline in auction earnings.
Spending Priorities and Revenue Reallocation
Newsom’s proposal includes a significant shift in spending priorities, especially in light of budget deficits exacerbated by external factors like tariffs. A notable portion of the program’s revenues, $1.5 billion, is earmarked for the state’s firefighting agency to address the escalating challenges posed by wildfires.
Furthermore, Newsom emphasized the accountability of polluters in contributing to climate solutions, echoing ongoing legislative efforts to hold oil and gas companies responsible for climate damages.
Legislative Path Forward
The governor’s pitch initiates discussions with legislative leaders, who have committed to reauthorizing the cap-and-trade program this year. The legislative vehicles for this reauthorization are Assemblymember Jacqui Irwin’s AB 1207 and Senator Monique Limón’s SB 840.
Newsom’s proposal sets the stage for continued climate action and financial prudence, emphasizing the state’s commitment to environmental sustainability and resilience amidst evolving challenges.
