California bill sees carbon market playing 2nd fiddle to direct regulation

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Story from Carbon Pulse

A trio of California state lawmakers has proposed legislation that would extend the state’s cap-and-trade programme but shift it into a complementary role to ‘command-and-control’ style regulations.

The bill – AB 378 – co-sponsored by Democrat Assembly members Cristina Garcia, Eduardo Garcia and Chris Holden and released publicly on Thursday, is aimed at forcing the government to cut pollution in California’s more impoverished communities, which they say have suffered under the state’s carbon market.

A chorus of lawmakers and other environmental justice campaigners argue that emissions cuts made outside of the state that generate carbon offsets result in higher output at California’s most polluting factories, many of which tend to be located near disadvantaged neighbourhoods.

The bill would authorise new or amended rules to extend the carbon market from 2020 to 2030, but it emphasises that the market-based mechanism would play second fiddle to other direct regulations, all of which must “adopt the most effective and equitable mix of emissions reduction measures” to meet both climate and air quality goals.

In addition, California’s Air Resources Board (ARB) would be required to “consider and account for the social costs” of GHGs when developing a regulatory pathway to meet the state’s emissions targets, which include a 40% cut from 1990 levels by 2030, while also pursuing policies that generate more jobs and investment in the most deprived communities.

But the bill appears to be in sharp contrast with a push by Governor Jerry Brown to extend the market until the end of next decade through a so-called ‘urgency bill’ approved by two-thirds of lawmakers – the threshold required to pass any legislation that amounts to a new tax.

Democrats currently control two-thirds of the legislature, but not all are on board with Brown’s plan.

In an effort to win over reluctant legislators, the governor proposed earmarking $2.2 billion in auction revenue over 2017-2018 to various climate action projects throughout the state.

AB 378’s sponsors are not yet pushing for the two-thirds support required to keep revenues coming in, but observers see the bill as an opening salvo from the increasing number of environmental justice advocates in the assembly, who have made clear their opposition to extending the state’s market under its current rules.

Amongst the post-2020 carbon market changes expected to be lobbied for are lower offset usage limits and restrictions on the number that can be imported from out-of-state.

According to InsideEPA, heavy industry has challenged the environmental justice groups’ criticism of the carbon market’s current rules, highlighting that major emitting facilities are still required to comply with an array of air quality regulations outside of their cap-and-trade obligations.

“Whether you like cap-and-trade or not, you’re riding that horse,” Andre Templeman of consulting firm Alpha Inception told the LA Times.

“If you shoot it, you’re in a lot of trouble.”

By Mike Szabo –