The California Assembly and the California Senate both voted Monday to extend the state’s cap-and-trade program, which requires companies to pay for carbon pollution, through 2030.
The bill passed with supermajorities in both chambers with bipartisan support, particularly in the Assembly, where seven Republicans voted in favor of the extension.
“Californians understand that we can’t truly have a healthy economy that’s built to last without taking meaningful steps to protect public health and preserve a livable environment,” California Senate President pro Tempore Kevin de León (D) said in a statement following approval of the extension. “This deal strikes that balance and shows once again California is more than ready to step up and lead where Washington will not.”
California’s original cap-and-trade bill passed in 2006 with a simple majority but has seen challenges from businesses groups, including the Chamber of Commerce, which argued that carbon pricing constitutes an illegal tax (that particular claim was rejected by the California Supreme Court earlier this year). New taxes in California require approval from two-thirds of the California legislature. This time around, to guard against future legal challenges — and thereby improve certainty in the carbon market—Gov. Jerry Brown (D) pushed for a super majority vote for the program’s expansion.
Brown, who has stepped into the national and international spotlight in the wake of the Trump administration’s dramatic reversal on climate action, pushed hard for the bill, telling legislators Thursday it constituted “the most important vote of your life.”
— Jerry Brown (@JerryBrownGov) July 13, 2017
“I know we’ve got politics that have everybody on different sides,” Brown said. “This is fundamental, and that’s why I stand here and say it is the most important vote.”
California is the world’s sixth largest economy and is home to a massive oil and gas industry — one that is larger than several state economies, according to analysis by the Los Angeles County Economic Development Corporation. It’s also home to one of the nation’s most progressive environmental movements and has considered itself a leader on environmental issues for decades.
On the Senate floor Monday, de León repeatedly referred to the extension as a “legislative unicorn,” because it was able to win support from a broad coalition of stakeholders, including environmentalists, businesses, and agricultural groups. Still, the bill — which was drafted over the course of a week and replaced a different extension that sought stricter pollution limits for oil and gas companies — sparked intense debate within the environmental community. Environmental justice groups, including the Sierra Club of California, 350.org, Food and Water Watch, Friends of the Earth, and the Center for Biological Diversity, all opposed the bill, claiming that it gives too much to the fossil fuel industry in return for too little for vulnerable communities.
“California is a worldwide leader in climate action, but AB398 reneges on this leadership by forsaking frontline communities,” Marce Gutiérrez-Graudiņš, founder and director of Azul, an organization working with Latinos to help protect oceans and coasts, said in a statement. “Californians deserve climate action for all, environmental justice groups are ready to work on better and more inclusive solutions.”
Chief among opponents’ criticism of the cap-and-trade bill is that, in a compromise with industry, the bill prevents the California Air Resources Board, which monitors and regulates air quality throughout the state, from directly regulating emissions from local sources that are also subject to cap-and-trade regulations. Throughout California, major polluters —like oil refineries, landfills, and industrial warehouses — tend to be concentrated in low-income communities and communities of color. Preempting local authorities from controlling those sources, critics claim, favors polluters over communities that live in the shadow of that pollution.
“I think we can all agree that climate change is something that needs to be addressed immediately,” Kathryn Phillips, director of the California Sierra Club, said during a Senate hearing on Monday. “We believe that the preemption language is a problem. We believe it sets a precedent.”
Assemblymembers Cristina Garcia and Eduardo Garcia, both Democrats, authors of the cap-and-trade expansion bill, and champions of the environmental justice movement, also proposed companion legislation meant to address some of the concerns from environmental justice groups. The companion legislation — which passed easily alongside the extension — requires more stringent monitoring, equipment updates, and stricter penalties for noncompliance for polluters.
“I would not be moving forward if I didn’t think this was a balanced package,” Garcia said during a press call on Saturday. “While none of us got everything, all of us collectively are in a better place.”
Oil and gas companies have been supportive of the bill, largely because they see it as an improvement over the volatility of California’s current carbon market. From the industry perspective, oil and gas interests argue that cap-and-trade, rather than a patchwork of local regulations, gives businesses a better sense of how to plan for long-term reductions in their emissions, because they know exactly what the cap on their emissions will be. It’s similar to the kind of compromise that the Climate Leadership Council — founded by former Republican cabinet members, ambassadors, and economists — proposes in their carbon tax scenario: a market-based solution in exchange for a rollback of regulatory control.
Reporting by In These Times suggests that fossil fuel interests — chiefly the Western States Petroleum Association, which includes members like Shell, BP, and ExxonMobil — had an outsized impact in writing the current cap-and-trade bill. According to In These Times, the preemption compromise came directly from fossil fuel interests, but was included by Brown’s office almost verbatim in the final proposed bill.
Critics of the bill have called the compromise a handout to the oil and gas industry, and have accused Brown of climate hypocrisy — courting China and other states on climate action while making deep concessions to fossil fuel interests at home.
“The oil lobby has had way too much influence on this legislation,” Bill Magavern, policy director of the Coalition for Clean Air, told reporters last Monday.
Not all environmental groups opposed the bill, however. Some, like Natural Resources Defense Council, Audubon Society, the League of Conservation Voters, and the Environmental Defense Fund, supported the cap-and-trade expansion, arguing that a compromise bill was better for climate action than letting the bill fail.
“The legislation represents a big step forward to continue California’s global climate leadership,” Alex Jackson, legal director of NRDC’s California climate project, said in a press statement. “The concessions to industry are bitter pills, but on balance the package ensures our emissions limits are enforceable against polluters and secures critical gains to improve air quality for millions of Californians.”
It’s true that other states — and countries from Canada to China—have cited California’s market as inspiration for their own trading schemes. But California’s cap-and-trade market has been particularly volatile in recent years, with two-thirds of pollution credits going unsold at an auction last year. Proponents of the new bill argue that extending the cap-and-trade program through 2030 would give the program the kind of legal and market certainty needed to reduce volatility in the state’s carbon auctions.
“If cap-and-trade falls apart, that will send a strong market to the world,” California State Senator Scott Wiener (D), who supported the bill, said during a hearing on Monday.
But if California’s cap-and-trade debate sends signals to the rest of the world, it also sends signals to progressive states looking to move forward with climate action in the face of the Trump administration. The factions that emerged within California’s cap-and-trade debate — environmental and social justice groups pushing for greater protection for vulnerable communities on one side, moderate business interests pushing for market certainty on another — reflect a similar fight that broke out in Washington state over that state’s proposed carbon tax initiative in November 2016. In that case, the carbon tax initiative fell short on election day, after environmental groups criticized the bill for failing to even consider the perspective of vulnerable, low-income communities of color.
The California cap-and-trade bill’s authors, for their part, claim to have gone into the drafting process with deep concern for climate equity and environmental justice.
“This cap-and-trade, climate change conversation, for me and the chairman, this for me isn’t about the melting ice caps or polar bears disappearing,” Garcia said during a committee hearing on Monday. “This is about the public health and well-being of the people of California.”
But environmental justice groups fear that the cap-and-trade extension is merely window-dressing for a state unwilling to reckon with both its lofty climate goals and powerful fossil fuel industry.
“This plan has Big Oil’s fingerprints all over it and doesn’t do enough to protect vulnerable communities or to achieve California’s ambitious targets for reducing carbon pollution,” Masada Disenhouse, 350.org’s U.S. Organizing Coordinator and a co-founder of SanDiego350, said in a press statement. “We need to extend California’s climate law, but we also need to protect the ability of local air districts to regulate pollution in their backyards — not give refineries and other fossil fuel infrastructure a free pass to pollute.”