Brown Administration Proposes Another 10 Years Of Cap-And-Trade

California air regulators have proposed new rules that would extend the state’s signature climate change program by another decade--and likely add fuel to a smoldering dispute between Governor Jerry Brown's administration and business groups.

The Air Resources Board released new draft rules Tuesday evening that would continue emissions reductions through 2030.

Opponents say the Brown administration doesn’t have that authority.

The crux of the argument is over one line in AB 32, the 2006 law that created cap-and-trade. The law authorized the program to reduce greenhouse gas emissions to 1990 levels by 2020.

The line says,"It is the intent of the Legislature that the statewide greenhouse gas emissions limit continue in existence and be used to maintain and continue reductions in emissions of greenhouse gases beyond 2020."

The Brown administration has interpreted that as authority to make further cuts.

"AB 32 does not envision that we simply stop reducing emissions when we hit the 2020 target," says Dave Clegern of the Air Resources Board. "The reductions are to continue."

Clegern says the extension could help sales of cap-and-trade credits, which fell off sharply in May.

"The more certainty for the market, the better," says Clegern. "Certainly if the program is going beyond 2020, that would be helpful in that regard, because people would know there investments are a longer-term kind of thing."

The new proposal would extend the program to continue reducing emissions by another 40 percent.

Business groups, the oil industry and Republican lawmakers say that’s an overreach. The state legislative counsel has agreed. It says continuing the program requires a vote.

The entire program is also facing a legal challenge, because the Legislature created it using a majority vote.

The Brown administration could try to work out a deal on both issues when lawmakers return in August.

If the draft rules remain in place, the board could finalize them next spring.

As a refresher: Under the cap-and-trade program, companies that produce carbon emissions have to purchase credits for them. Less credits are available each year, meaning less emissions allowed. Theoretically, the price of each credit increases through the principles of supply and demand, creating more economic incentive for companies to lower emissions. The revenue from sales has also been used to fund state environmental and transportation programs, including the high-speed rail project.