Success! California’s Cap-and-Trade Program Lives to See Another Decade

After months of worrying, weeks of wrangling, days of despairing, and hours of hoping, SBC is happy to report that California’s Legislature voted to extend our state’s signature Cap-and-Trade (C&T) program to 2030. The agreement reached on Monday night, July 17, ensures that California will continue its leadership role in reducing harmful carbon emissions while supporting business growth that some people expect will bump the state up to the 5th largest economy in the world this year.

SBC President Steve Frisch outlined much of the new legislation’s content in his recent blog about the importance of compromise in propelling big ideas that help all residents of California and beyond. But I want to take this opportunity to dive a little deeper into the benefits that the Sierra-Cascade region can expect from this historic agreement.

This week’s legislative package consists of two primary bills – one that extends the Cap-and-Trade program from its current 2020 expiration out to 2030 and the other that addresses localized air quality improvements to be made in conjunction with greenhouse gas (GHG) reduction efforts. Thanks to the hard work of SBC and many partners, the successful compromise results in specific benefits to the Sierra-Cascade and other rural regions of the state.

One of the most important results is knowing that existing C&T programs, such as Affordable Housing and Sustainable Communities, Sustainable Agricultural Land Conservation, Healthy Forests, Low Carbon Transportation, and Energy Efficiency/Renewable Energy, will keep funding important work in rural communities. Since 2014 these programs have directed more than $40 million to projects located throughout the Sierra-Cascade region and have created tens of thousands of jobs. Now that the program’s future is certain, we expect that C&T auctions will generate even more funding for such projects between now and 2030.

In addition to the existing programs, the legislation contains new program elements that will benefit our region. For example:

• The importance of water from the Sierra is explicitly mentioned, creating a platform for our continued advocacy to secure more investment in our region’s natural resources and communities. In addition, agriculture and forestry are third and fourth on a list of the seven top priorities for expenditure of C&T funds. These are industries that drive many of our rural economies.
• The future price of C&T credits will be restricted to prevent uncontrolled price spikes on goods and services that we all depend on.
• The C&T “offset” program, which allows capped entities to generate a portion of their emission reductions through investment in projects outside their own industry, now requires that at least half the offsets come from or provide benefit within California. In the past, many of these offsets came from out-of-state forestry or agriculture-related projects. The new in-state requirement means more jobs, improved forest conditions, and healthier communities in the Sierra-Cascade and other rural forested areas.
• The task force that will guide the offset program includes mandatory representation by forestry and agricultural experts as well as environmental and conservation advocates, giving rural areas a stronger voice in how the program is managed.
• There is more of a focus now on increasing career technical education, job training, workforce development, and local hiring for C&T-related projects.
• As of July 1, the much-maligned State Responsibility Area (SRA) fire prevention fee assessed on rural landowners is suspended; instead, the funding for that program will come from C&T auction revenue for the duration of the C&T program (through 2030).
• And finally, because the extension bill passed with a 2/3 vote of the Legislature, the C&T funds can be used for a broader range of projects without risk of a legal challenge. This is good news for rural communities because it means more opportunity for adaptation activities like forest management that have additional economic, social and environmental benefits.

Critics have asked why a C&T program in California is so important when we contribute only about 1% of the world’s greenhouse gas emissions. My response? If not us, then who. California is a national and international model in climate matters. We can encourage like-minded states and countries to follow suit, both in terms of adopting a C&T program and embracing the difficult but worthwhile process of securing bipartisan support. By struggling to reach a super-majority vote, we became more creative and engaged decision-makers beyond a strictly party-line vote.

Let’s hope this is a step across the threshold of polarized politics to a place where we can work together to improve our communities, our state, and the state of the world – by working together and each doing our part. SBC is ready.