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California's program to cap emissions and trade carbon
permits is a crucial component of a broader effort to reduce the
state's output of heat-trapping greenhouse gases to 1990 levels
by the end of the decade.
But it has come under fire from critics who have said the
program suffers from a glut of permits, reducing the incentive
for businesses to cut emissions and curtailing revenue from a
program that funds key low-carbon initiatives such as the
state's high-speed rail project.
The Assembly voted 42 to 29 on the bill, known as SB 32, which
goes back to the Senate for an up-or-down concurrence vote by
the end of August.
California Governor Jerry Brown on Tuesday said he was ready to
sign the legislation into law, which would require the state to
slash its emissions 40 percent below 1990 levels by 2030.
"Today, the Assembly speaker, most Democrats and one brave
Republican passed SB 32, rejecting the brazen deception of the
oil lobby and their Trump-inspired allies who deny science and
fight every reasonable effort to curb global warming," Brown
said in a statement.
California sold just a fraction of the carbon permits offered to
cover emissions this year, receiving the minimum price at an
auction last week, regulators said on Tuesday.
Carbon market participants said the weak auction results were an
indication that the program is oversupplied with permits and
that businesses are uncertain about the program's future, but
added that passage of legislation to extend it should raise
demand.
The California Air Resources Board, which regulates the program,
has said unsold allowances and low prices are an indication that
emissions reductions are occurring beyond the program's annual
targets.
But critics cited the results as an indication that the program
is not working.
"Today's failed results are yet another reminder that this
government program is inherently troubled and should be
abandoned," Senate Republican Leader Jean Fuller said in an
email.
The state on Tuesday said it failed to sell any permits offered
to cover carbon emissions in 2016 and sold just 660,560 of the
10 million permits it offered to cover emissions in 2019, at the
auction floor price of $12.73 a tonne.
That money will go into the state's greenhouse gas reduction
fund, which funds low-carbon projects.
The majority of the allowances the state sold at the August
auction were permits consigned to the state by electric utility
companies and do not provide revenue for the state fund.
The cap and trade program has raised $4 billion through its
quarterly auctions since launch in 2013.
Last week, Senate President Pro Tempore Kevin de Leon unveiled a
plan for $1.2 billion in unspent cap-and-trade revenue that
gives priority to improving air quality in low-income
communities in Los Angeles and the Central Valley.
(Reporting by Rory Carroll; editing by Bill Rigby, G Crosse)
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