The California Chamber of Commerce this week announced its support of legislation that will help maintain a healthy economy and provide the least costly path to achieving the state’s climate goals by extending the cap-and-trade program to 2030, AB 398 (E. Garcia; D-Coachella).
Essential Element
“The balanced, well-designed cap-and-trade program in AB 398 is essential to reducing the costs of California’s greenhouse gas reduction goals established last year in SB 32,” said CalChamber President and CEO Allan Zaremberg in a July 13 statement. “AB 398 will provide the least costly path to achieving our climate goals by extending cap and trade to 2030. The measure will help California maintain a healthy economy that produces well-paid, middle class jobs.”
Last year California passed SB 32 (Pavley; D-Agoura Hills; Chapter 249), which adopted the most ambitious greenhouse gas (GHG) reduction goal in this or any other country.
By 2030, Californians must reduce carbon emissions by 40% below their already-constrained 2020 levels. SB 32, however, did not authorize the least costly approach to reach the 2030 greenhouse gas reduction goal.
AB 32, the 2006 landmark climate change law, set a goal of reducing greenhouse gas emissions to 1990 levels by 2020, the equivalent of a 30% reduction compared to a business as usual trend.
AB 398 creates a market-based approach of cap-and-trade, which would provide the largest GHG emission sources with more flexibility and is less expensive to consumers than the command-and-control scheme embodied in SB 32.
According to the nonpartisan Legislative Analyst’s Office (LAO), authorizing cap-and-trade beyond 2020 “is likely the most cost-effective approach to achieving the 2030 GHG target.” The LAO compared the costs of cap-and-trade with direct regulation and found mandates to be two- to 10-times more expensive than a market mechanism.
CalChamber Lawsuit
In 2012, the CalChamber sued the Air Resources Board (ARB) for setting up a program to auction a portion of the GHG emission allowances to the highest bidders. The lawsuit asserted that the auction amounted to a tax requiring approval by a two-thirds vote of the Legislature.
Although the California Supreme Court declined to review the split 2-1 decision by the Appellate Court in favor of the state, the CalChamber lawsuit set the stage for the administration calling for a two-thirds vote on the cap-and-trade bill so there would be no question about the use of the revenues generated by the auction.
Legislative leaders have scheduled a vote on AB 398 for next week.
