70: Cap-and-Trade Approval Rule
California’s cap-and-trade market for greenhouse gases is one the state’s most important climate change policies. Under the program, the state restricts greenhouse gas emissions and then auctions off the right to pollute up to that limit. The state uses the auction revenue to fund public transit, affordable housing, the high speed rail program, and other projects that can in theory be said to reduce greenhouse gas emissions. The program was set to expire in 2020, but state lawmakers renewed it, extending its life to 2030.
What it would do:
Lock away any cap-and-trade auction revenue raised after 2024 and require the approval of two-thirds of both the Assembly and Senate before it can be spent.
What it would cost the government: Probably not much. If lawmakers can’t agree on how to authorize the new money in 2024, a number of tax credits will also temporarily expire. This would allow the state to raise more money than expected in the meantime—which could add up to a few hundred million dollars per year.
Why it’s on the ballot:
Last summer, Democrats in the state Legislature decided to renew the state’s cap-and-trade program and so they made an offer to a handful of moderate Republicans to get them on board: support renewal and we’ll agree to put this proposition on the ballot. Why would Republicans care? In Sacramento, Democrats regularly hold majorities, but not supermajorities in both chambers. The two-thirds requirement makes it more likely that Republican input will be required for the future of the cap-and-trade program.
This ballot initiative was introduced in the Legislature by Assemblyman Chad Mayes, a Republican from Yucca Valley who nonetheless lost his position as party leader in the Assembly as a result of his support for renewing the cap-and-trade system.
Arguments in Favor:
This will ensure that oversight of the cap-and-trade program is bipartisan and represents a wide variety of interests across the state. Passing this proposition is in the interest of both Republicans, who should demand to have a say in how millions of dollars of auction revenue are spent, and Democrats, who should demand that the cap-and-trade program enjoy bipartisan support.
If two-thirds of lawmakers are required to spend auction dollars in 2024, big polluters and their allies in their Legislature will be able to hold the program hostage, holding out their support until they win concessions that harm our environment. If this proposition passes, we can expect future grid lock and weaker climate policy in California.