Deal updates cap-and-trade program, makes tax, fee changes
Posted July 11
SACRAMENTO, Calif. — Legislation to renew California's cap-and-trade program through 2030 and boost local monitoring of air quality are expected to be up for hearings and a vote this week.
The cap-and-trade bill, AB398, needs support from two-thirds of lawmakers to pass. Cap-and-trade puts an overall limit on greenhouse gas emissions and requires companies to buy or trade allowances in order to emit pollutants. A companion bill, AB617, aims to reduce air pollutants that harm public health.
Here's a look at what's in the bill, AB398:
—Maintaining free allowances: The deal continues giving free allowances to industries that would be at a disadvantage competing against out-of-state firms not required to buy pollution credits. The provision is intended to prevent companies from simply shifting their pollution to other states, which would not reduce global emissions. Critics say it's a giveaway to big businesses.
—Ratcheting down offsets: Companies that pollute can account for roughly 8 percent of their emissions reductions through offsets, or projects that mitigate the effects of global warming elsewhere. Those offsets can be built in other states, and they have included things like reforestation efforts or projects to capture methane. The deal reduces allowable offsets, and it pushes for them to more directly benefit California.
—Creating a price ceiling: The California Air Resources Board is directed to set a price ceiling for carbon allowances, with the goal of avoiding price spikes to consumers.
—Pre-empting local air districts: Under the deal, local air districts aren't allowed to put further restrictions on carbon emissions from stationary polluters such as oil refineries in their areas.
—Suspending fire-prevention fee: The state imposes a $152 annual fee on habitable structures, including homes, to pay for fire-prevention services such as inspections and emergency evacuation planning. The deal eliminates that fee and makes up the money with cap-and-trade revenue.
—Expanding tax exemptions: The deal includes new exemptions for power distributors and generators from the state sales and use tax. Under it, any property purchased for the generation, production, storage and distribution of electric power would be exempt from the tax through 2030. It also extends a similar exemption for manufacturing and research and development from 2022 to 2030.
—Prioritizing spending: Money collected through cap-and-trade goes into a Greenhouse Gas Reduction Fund for projects such as transportation, affordable housing and high-speed rail. The bill creates a more specific order of projects to prioritize, starting with reducing air pollutants from stationary and mobile sources. Other priority projects include low- and zero-carbon transportation alternatives, sustainable agriculture, urban greening, climate adaptation and clean energy research.