California’s cap and trade program is one of the most advanced emission reduction platforms in the world, yet its effectiveness is in doubt with all of the anticipated revenue from the previous and coming 12-month periods diverted to balance the budget.
As part of Gov. Brown’s recently passed 2013-14 budget, the first $500 million of the cap and trade program’s auction revenue will be loaned to California’s general fund. In its first three successful carbon permit auctions the program has brought in a total of $257 million intended for clean energy investment in California.
The cap and trade program, passed in 2006 as AB32, aims to reduce California’s greenhouse gas emissions to 1990 levels by 2020, a 30 percent reduction from business as usual.
Businesses had long argued that a flexible cap and trade program was preferable to rigid regulations. California’s program allows companies to reduce their own emissions or pay someone else to reduce emissions if they can do so more cost effectively.
By law, the money raised by auctioning emission permits must be used to reduce greenhouse gas emissions, and a quarter of it must benefit disadvantaged communities. The diversion is legal because it is a loan which will be repaid to clean energy programs, but taking the money will delay action from those programs. In addressing climate change, delay is the enemy.
– Will Caruthers
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