Despite the cost and controversy associated with it, the California Legislature recently reauthorized the state’s first-in-the-nation cap-and-trade system for another 10 years, until 2030.
The reauthorization fulfills one of the major policy goals of Gov. Jerry Brown, who is looking to cement his historical legacy on the environment, in part, through the reauthorization of this far-reaching greenhouse gas emission program.
However, critics have charged that the motivations behind cap-and-trade system have less to do with protecting California’s environment for future generations and more to do with the huge revenue streams the program brings with it.
California has already collected some $3.4 billion from cap-and-trade auctions since the state Legislature implemented the program in 2012, with much of that money directed to politically favored projects. And now, in order to ensure the passage of the cap-and-trade reauthorization bill, AB398, Gov. Brown and his allies in the Legislature loaded it up with exemptions and sweeteners for favored industries, angering a diverse set of interest groups and activists in the process.
“This is what good government looks like,” said Gov. Brown in a statement following cap-and-trade’s final passage.
Others see it quite differently.
Cap-and-trade, which caps greenhouse gas emissions in the state, and auctions off emitting rights to industry, has already hit small businesses and consumers hard through increased fuel costs. Reauthorization will further raise California’s gas prices, already some of the highest in the nation, by 15 to 64 cents a gallon by 2021, according to the nonpartisan Legislative Analyst’s Office. The gas tax increases could potentially cost consumers as much as $2 billion a year.
“The way the deals were cut … cutting out small businesses, cutting out working families, who are trying to just live their lives, is a very frustrating state of public policy,” said Shawn Lewis, communications director for the California National Federation of Independent Businesses.
While small businesses aren’t happy, the Legislature gave away exemptions to lessen the impact on some larger industries. A partial sales tax exemption for manufacturers, for example, was extended past its initial 2022 expiration date and was expanded to include power companies and agricultural businesses. Lawmakers also suspended a special fire prevention fee on rural landowners. They included those measures to help get…