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California lawmakers reach cap-and-trade agreement

11 Jul 2017 15:21 (+01:00 GMT)
California lawmakers reach cap-and-trade agreement

Washington, 11 July (Argus) — California governor Jerry Brown (D) and legislative leaders have reached an agreement on legislation to extend the state's cap-and-trade program, setting up a possible vote later this week.

Brown, along with Senate president pro tempore Kevin de Leon (D) and Assembly speaker Anthony Rendon (D), last night unveiled a pair of bills to extend the cap-and-trade program through 2030 and also address local air quality concerns.

"The legislature is taking action to curb climate change and protect vulnerable communities from industrial poisons," Brown said.

The announcement of the legislation sets up a possible vote on the bills later in the week, with Democrats aiming for a two-thirds majority to help shield the cap-and-trade program from litigation.

The cap-and-trade proposal is similar to draft legislation that circulated in the capital last week. It would extend the carbon market to help the state cut GHG emissions by 40pc from 1990 levels by 2030. It would also direct regulators to set a price cap for allowances, set new requirements for the use of carbon offsets, and prioritize the spending of auction revenue on projects that help address local air quality concerns, low-carbon transportation and agriculture.

The air quality bill would direct the Air Resources Board (ARB) to gather better data about toxic air pollutants and develop a strategy to reduce those emissions in disadvantaged communities. It would also require large industrial facilities, including oil refineries, in areas with the worst air quality to upgrade their pollution control equipment by 2023.

"With its strong air quality provisions, this agreement ensures that Californians in underserved communities, and communities most impacted by air pollution, will receive the greatest benefit," Rendon said.

In an effort to win over more Republican votes, the bill includes an extension of tax incentives for manufacturers and suspends a controversial fire prevention fee the state started charging property owners in 2014. Allowance revenue would be used to replace that funding.

Democrats hold a supermajority in each chamber of the legislature, but may need to win over some Republican support to ensure passage, particularly in the Assembly, which now has an open seat. Assembly member Jimmy Gomez (D) will be sworn in to the US House of Representatives today after winning a special election last month.

The cap-and-trade bill would limit the use of offsets to 4pc of a company's compliance obligation, half of which must provide direct environmental benefits in California. Starting in 2026, that limit would bump up to 6pc. The current program allows offsets for up to 8pc of a compliance obligation.

The bill would also extend free allowance allocations for certain industries, but gradually reduce those allocations by 40pc by 2030, in line with the state's overall GHG reduction target.