California May Return Carbon Fee Money To Consumers

SACRAMENTO (AP) — California Senate Democrats on Monday proposed a significant overhaul of the state’s cap-and-trade program that would use money raised from taxing polluters to give rebates to consumers.

The proposal is the Legislature’s latest attempt to extend one of California’s primary efforts to reduce carbon emissions, which is scheduled to expire in 2020.

The measure would allow the state to charge a fee for carbon emissions that would apply to all industries, with a price floor and ceiling that rises over time to limit volatility in prices while steadily raising the cost of pollution. The existing cap-and-trade program includes only a price floor and gives pollution permits for free to some industries while others must pay.

The measure aims to blunt the impact of higher gas and energy prices by refunding as much as 90 percent of the revenue to consumers. The rest would be used to pay for infrastructure and research on climate and clean energy.

“Along with clean-energy jobs and a cleaner environment, people will see a return on their investment in the form of a climate dividend,” said Sen. Bob Wieckowski, a Democrat from Fremont who wrote the bill.

The proposal requires support from two-thirds of lawmakers in the Assembly and Senate. That’s a tall order after Gov. Jerry Brown last week signed a bill hiking gas taxes and vehicle registration fees to pay for road construction, especially for lawmakers in swing seats and lower-income districts who may be reluctant to vote once again for a measure that could increase gas taxes.

Cap-and-trade advocates says the state has already approved legislation requiring California to significantly reduce its greenhouse gas emissions, and gas taxes will probably rise whether cap-and-trade is extended or not.

Wirckowski’s proposal is not universally popular among environmentalists.

Erica Morehouse, an attorney for the Environmental Defense Fund, said the program doesn’t need an overhaul. She warned in a statement that the bill could make it harder to meet the state’s climate goals and preserve its ties to other jurisdictions, such as the province of Ontario, Canada, that might want to link their own carbon markets to California’s.

“Rather than a wholesale change of a program that is meeting its goals, we should preserve what’s working and strengthen the parts that aren’t doing enough,” Morehouse said.

Wieckowski’s bill, SB775, is one of a several proposals in the Legislature to extend the cap-and-trade program past 2020. The program’s supporters aim to approve legislation during June before Democratic Assemblyman Jimmy Gomez would have to resign if he wins a special election for a U.S. House seat in Los Angeles.

A group of Assembly Republicans have said they’re willing to consider voting for a cap-and-trade extension under certain circumstances, but it’s unclear whether Democrats would meet their demands. Republicans and business groups worry the end of cap-and-trade would lead the California Air Resources Board to enact even costlier regulations to meet the state’s emissions targets.

Assemblyman Rocky Chavez, R-Oceanside, said he likes the idea of giving back money to consumers, but he needs to see more detail. The program can’t become a “honey pot” that just raises money for the government, he said, and it must protect low-income consumers and manufacturers.

“If we can somehow find that sweet spot, then we’ll be there,” Chavez said.

Wieckowski’s bill would kick in in 2021, at which point permits bought under the current program would become worthless. That could undermine demand for them under the current program and limit a revenue stream that raised hundreds of millions of dollars a year until demand plummeted last year. Revenue from the program is a key funding source for the high-speed train between San Francisco and Los Angeles.

Permits would start at a minimum price of $20 per ton of carbon and a maximum of $30, up from the current price floor of $13.57.

Meanwhile, Senate President Pro Tem Kevin de Leon, D-Los Angeles, plans to release separate proposal Tuesday that would require the state to get 100 percent of its electricity from renewable sources by 2045.

© Copyright 2017 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.

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