California fights to extend carbon cap-and-trade programme

California’s carbon cap-and-trade programme is leading to bitter disputes. The Democratic governor Jerry Brown wants the programme to continue until 2030. Republicans and business are pitted against him. And now the California Chamber of Commerce has sued the state. The plan extends all the way to Canada. John Dyer reports from Boston.

California Governor Jerry Brown wants to extend the state’s carbon cap-and-trade programme to 2030. Republicans are opposed. (Image credit: California Air Resources Board, flickr/Creative Commons)

California Governor Jerry Brown wants to extend the state’s carbon cap-and-trade programme to 2030. Republicans are opposed. (Image credit: California Air Resources Board, flickr/Creative Commons)

California leaders are fighting over keeping their carbon cap-and-trade program alive beyond its expiration date in 2020.

Governor Jerry Brown, a Democrat, has proposed extending the four-year-old programme modelled on Europe’s cap-and-trade system as he negotiates with sceptical legislators, litigates a court challenge and tries to convince reluctant investors to pour more money into the program.

Emission trading reduces CO2 emissions

On Tuesday members of the California Air Resources Board, which Brown controls, released a plan that would expand the programme that caps polluters’ emissions but allows them to buy and sell credits to increase their releases.

Scheduled for a vote in the fall, the plan aims to lower the top cap for emissions by 3.5 per cent annually through 2030. The programme has cut the Golden State’s emissions by 1.5 per cent in its first two years.

“Despite California’s marked progress, greater innovation and effort is needed to avoid the worst consequences of climate change,” the board’s plan said.

The plan is a gamble by Brown, who wants to cement his environmental legacy as leader of the biggest state in the United States before he leaves office in two years.

“We will not meet our world-leading clean air and emission reduction targets unless we solidify and redouble our commitment to the state’s cap and trade program and climate goals beyond 2020 and we will work hard to get that done,” said Brown in a statement.

“An extension will not only provide market certainty, but will ensure ongoing funding for clean energy programs, especially in vulnerable communities.”

Canadian province involved

Environmentalists support Brown, noting that the new plan would admit the Canadian province of Ontario into California’s programme – Quebec is already in the programme.

The extension would also initiate a process to partner with Mexico and Washington State and let California companies fund conservation land in the Amazonian rainforest to offset carbon releases.

“We have seen them be successful and allow the economy to thrive while implementing and achieving carbon reduction,” said Environmental Defense Fund Senior Attorney Erica Morehouse.

Chamber of Commerce sues the state

Republican lawmakers and some business-friendly Democrats who hold a majority in both chambers of the legislature disagree with Brown. They argue that the cap-and-trade program is a tax that requires the approval of a two-thirds majority of the legislature.

“Any such extension of the cap-and-trade program would require legislative approval,” said a statement by Republicans in the state Senate.

The California Chamber of Commerce has sued the state, arguing the program is an illegal tax. A state appeals court is expected to rule in the case this summer.

The lawsuit reflects bitter opposition from business groups.

“The stakes have never been higher for the business community as we bear the billions of dollars in compliance costs for climate change,” said California Business Round Table President Rob Lapsley.

“We will be reviewing the new proposed regulations with a microscope to ensure that they balance jobs and achieve greenhouse gas reductions.”

Lack of interest in the programme

The programme has also run into other troubles that raise questions about its viability.

In May, companies bought only 2 per cent of the carbon emissions credits on sale, raising USD 10 million rather than the USD 500 million that state officials forecast. That money helps pay for projects like California’s high-speed rail line from Los Angeles to San Francisco, electric car subsidies and other cleantech funding.

Critics have said disinterest among carbon permit buyers reflects a lack of support for cap-and-trade.

Republican delays are to blame

Proponents said the state needed to expand the programme to make it more attractive to investors. The pending lawsuit and Republican opposition have forced companies to delay purchasing credits in case the court deems the system illegal, they said.

“The governor is doing his job,” said Senate President Pro Tem Kevin de León, a Democrat, during a Tuesday news conference in.

“Now it’s time that the Legislature do its job by making sure that we bring predictability, that we stabilise the markets, that we continue to invest in vulnerable communities throughout the state of California.”

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