California Senate struggles to extend cap-and-trade program

Dive Brief:

California lawmakers are wrestling with how to extend the state’s greenhouse gas emissions cap-and-trade program, currently authorized to operate through 2020.
The Los Angeles Times reports two measures to extend the market failed in the California Assembly last week. Officials are working to hash out a solution that achieves a two-thirds supermajority, which would protect it from legal challenges.
The market aims to help California reach ambitious renewables goals. Last year, Gov. Jerry Brown (D) announced a plan from the California Air Resources Board to extend the program through 2050. But business groups have challenged the program, saying the California Air Resources Board does not have legal authority to conduct an carbon auction.

Dive Insight

The LA Times reports that Gov. Brown wants to nail down a cap-and-trade extension by a mid-June budget deadline, but leadership in the California Senate has pushed back on that schedule.

Lawmakers are taking their time in an attempt to get a two-thirds supermajority that would protect the program from legal challenges.

Previously, the California Chamber of Commerce filed a lawsuit arguing that a 2006 law that is the basis of the cap-and-trade program does not authorize the state to conduct an auction, which they say is the equivalent of a tax increase.

Assembly Bill 378, a bill to extend the program for a decade failed in a roll call vote. Another bill, AB 151, never came up for a vote. That measure would have made the cap-and-trade program permanent.

The cap-and-trade program is designed to support California's goals to cut greenhouse gas emissions by at least 40% below 1990’s level by 2030. The Senate last week passed a bill that would mandate 100% renewable energy by 2045, building on the state's current 50%-by-2030 goal.

Democrats won a supermajority in both houses of the California Legislature last year, but so far have struggled to bring those margins to bear for cap-and-trade.

Carbon auction results in the past have attracted criticism in the past, with auctions coming up millions short in revenue. But the latest auction conducted in May saw a shift in selling permits, according to the Times, generating $500 million in revenue.