Life Beyond the Water Bond…Cap-and-Trade Awaits
I know, you saw my byline and thought, “Oh no, not another post about the water bond. It passed last month, so aren’t we done with that already?!? ”
You’re right – the water bond did pass – but that’s not what I’m writing about today. Because in addition to pressing for funding from the water bond, SBC and its new initiative, Sierra CAMP[1], have been working with partners across the state to secure funding from the Greenhouse Gas Reduction Fund (GGRF) established as part of the Global Warming Solutions Act of 2006, also known as AB 32.
Uh-oh, I can tell I’m losing you… don’t go! This particular fund is expected to generate $3-5 billion a year – yes, each year – for projects that reduce greenhouse gas (GHG) emissions and improve air quality. That’s a lot of money by anyone’s standards. So stay with me here!
When it passed in 2006, AB 32 put California on the map as a leader in addressing climate change by requiring us to reduce our GHG emissions to the levels they were in 1990. That’s about a 15% reduction from what would be “business-as-usual.” In addition, then-Governor Schwarzenegger issued an Executive Order S-3-05 requiring that we keep reducing our emissions beyond 2020. He called for 80% reductions below the 1990 levels, to be achieved by the year 2050. While this sounds difficult, we know that other states have achieved similar outcomes related to acid rain. So we can do this.
One of AB 32’s key emission reduction strategies is a cap-and-trade program. The program works by setting a “cap” or limit on emissions from different sources identified in the pie chart, such as transportation, utilities, and industrial facilities. The limit keeps dropping over time to reduce the total amount of pollution to the targeted levels. Companies that exceed their cap are penalized. But companies that keep their emissions below the cap can “trade” emission credits to those companies exceeding their limit. The program rewards early adopters by allowing them to trade credits; and it allows more flexibility for those that can’t immediately meet the limits by letting them purchase credits to offset excess emissions. The overall result is cleaner air and an economic incentive for all companies to improve operations over time through cleaner fuels and advanced technologies.
The state uses an auction process to trade credits, where companies with fewer emissions can auction their credits to companies in the market to buy. Revenue generated by this auction process goes into the Greenhouse Gas Reduction Fund to be used for clean transportation, energy efficiency, resource management and other projects that reduce GHG emissions and help us reach our targets. Each year the state budget allocates GGRF funds to different state agencies, as outlined in an investment plan that gets updated every three years. This is where SBC comes in. We are partnering with other concerned groups to be sure that rural communities in the Sierra and elsewhere remain eligible for GGRF funding. To see the letters we have submitted on this topic, please click here, here and here.
Here is a chart showing the different pots of funding generated through the GGRF for the coming year. If you want to learn more about this funding – particularly the programs where Sierra communities might be eligible to apply – please join us for a one-hour webinar on Tuesday, December 9, from 11 am – noon, where I will give an overview of what we know about these programs so far. Click here to register.
[1] Sierra CAMP is a collaborative effort to address climate change in the Sierra and beyond by linking the rural areas where the state’s resources are located with the urban areas that rely on those resources. The collaborative will bring together leaders from government, business, academia and community groups to share information, leverage resources, identify critical needs and strategies, and attract funding to meet those needs. The Sierra CAMP initiative was launched at SBC’s “Peak Innovation” conference in October. Look for more information on Sierra CAMP in future blogs.
Image is from ARB site: http://www.arb.ca.gov/cc/capandtrade/auctionproceeds/auctionproceeds.htm