Governor Brown, Oil Industry Share Interest In Cap-And-Trade Extension

Gov. Jerry Brown and the oil industry are both pushing to preserve California’s struggling cap-and-trade program. But that will require support from Democratic lawmakers who have doubts about the program.

The program allows companies to choose between lowering emissions and purchasing a limited number of credits for them. Sales of the credits have faltered over the past year, which analysts partly attribute to uncertainty about the program. It expires in 2020 and faces a legal challenge from businesses.

Brown wants a supermajority of lawmakers to pass an extension that could also nullify the lawsuit.

"I don’t think people understand if you don’t do cap-and-trade you just order, command, reduce greenhouse gasses," Brown told Capital Public Radio. "Take that machine and run it less or don’t run it at all. I don’t think they want to do that."

The passage of new, more stringent climate change goals last year means, without cap-and-trade, air regulators could just tighten emissions limits.

The oil industry has been a frequent foe of carbon limits, including the most recent goals--but it supports using cap-and-trade to meet them.

"It’s the only path," says Cathy Reheis-Boyd, president of the Western States Petroleum Association. "There is no other way to even think about meeting these aggressive targets, without some kind of cost-containment like the trading part of cap-and-trade provides."

But a growing faction of lawmakers has signaled they’re dissatisfied with the hands-off nature of the program. Democratic Assemblywoman Cristina Garcia led 15 lawmakers in introducing a bill that would extend cap-and-trade, but only along with a demand that the state more directly intervenes in disadvantaged communities that have poor air quality.

"We have done a lot to reduce carbon emissions, but it hasn’t been equitable across the whole state," Garcia says, when announcing the measure.

The oil industry will oppose new regulations. Reheis-Boyd suggests, instead, using cap-and-trade revenues to fund air quality projects in low-income communities. But much of that money is tied up in projects backed by the governor and legislative leaders, including high-speed rail.

Without a deal that works for all factions, it’s unlikely a cap-and-trade extension can receive the two-thirds vote it will require.