Legislature reaches a Deal on Cap and Trade
September 2, 2016
As the end of the legislative session came to a close this week, the Legislature and the Governor announced a deal on the expenditure of the 40 percent of unallocated cap and trade revenues, totaling $900 million in funds dedicated to a variety of programs to reduce greenhouse gas (GHG) emissions, while placing $462 million in a reserve account for future years. Lawmakers stated that the deal came to a close at the very end of session as they were awaiting August auction results that yielded less than favorable results.
The allocation plan and the cap and trade program have been under a heightened level of scrutiny as the last two carbon-permit auction yielded lower than expected revenues, bringing in only a combined $18.5 million as opposed to previous auctions that generated hundreds of millions. This does explain the caution exercised in allocating revenues and placing millions in a reserve account.
While the deal struck includes CSAC priorities, it is a bit of a mixed bag for some priority program expenditures, such as the healthy forests program, which received a lower than favorable allocation – only $25 million. Overall, counties are pleased to see funding to a variety of different programs, including $140 million dedicated to a new local climate program aimed at reducing GHG emissions from variety of different sectors in disadvantaged and other communities. In addition, the plan allocates $40 million to programs that increase waste diversion and help reduce methane emissions from our landfills. The deal also allocates $135 million to the Transit and Intercity Rail Program consistent with our ask that cap and trade dollars be invested towards transportation programs.
A budget trailer bill, SB 859, did accompany the allocation plan and includes relief for some biomass facilities, requiring retail sellers of electricity to purchase a total of 125 megawatts of power from biomass facilities that generate power from forest waste in areas impacted by tree mortality.
The following chart is a breakdown of the $900 million allocation plan, including the previously continuously appropriated funds to transportation and land use programs.
|
Investment Category |
Department |
Program |
Amount |
|
Continuous Appropriation |
High Speed Rail Authority |
High Speed Rail Project |
Previously Allocated $500 |
|
Transportation Agency |
Transit and Intercity Rail Capital Program |
Previously Allocated $200 |
|
|
State Transit Assistance |
Low Carbon Transit Operations Program |
Previously Allocated $100 |
|
|
Strategic Growth Council |
Affordable Housing & Sustainable Communities |
Previously Allocated $400 |
|
|
50 percent in reduction in Petroleum Use |
Air Resources Board |
Low Carbon Transportation & Fuels |
$133 |
|
Transportation Agency |
Transit and Intercity Rail Capital Program |
$135 |
|
|
Active Transportation |
$10 |
||
|
Heavy Duty and Off-Road Investments |
$150 |
||
|
Fleet Modernization for low income families |
$80 |
||
|
Local Climate Action |
Strategic Growth Council |
Transformational Climate Communities Program |
$140 |
|
Local assistance to DAC for climate action plans |
$2 |
||
|
Short-Lived Climate Pollutants |
Air Resources Board |
Black Carbon Wood smoke |
$5 |
|
Cal Recycle |
Waste Diversion |
$40 |
|
|
Dept. of Food & Agriculture |
Climate Smart Agriculture- Healthy Soils |
$7.5 |
|
|
Dept. of Food & Agriculture |
Dairy Digesters |
$50 |
|
|
Safeguarding California/Water Action Plan |
Dept. of Food & Ag & Water Resources |
Water and Energy Efficiency |
$7.5 |
|
Safeguarding California/Carbon Sequestration |
CAL Fire |
Healthy Forests |
$25 |
|
Urban Forestry |
$15 |
||
|
Natural Resources Agency |
Urban Greening |
$80 |
|
|
Dept of Community Services & Development |
Energy Efficiency Upgrades/Weatherization |
$20 |
|
|
TOTAL |
$900 M |
