SACRAMENTO — As Gov. Jerry Brown pushes an international climate-change agenda, he faces a crucial test at home: ensuring that California’s signature program to tackle global warming survives into the next decade.
Brown is fighting for a deal this month to extend the state’s cap-and trade program, which forces power plants, factories and refineries to pay to pollute and is set to expire in 2020. It has not come easily. He needs two-thirds of the Senate and Assembly to approve a complex proposal — one sure to have implications not just for planet Earth but also for Californians’ health and pocketbooks.
The governor wants to propel a cap-and-trade bill to victory before July 21, when lawmakers scatter for summer recess. To do so, experts say, he will have to find just the right balance between environmental and economic concerns, including the costs triggered by regulations and the shift to a cleaner economy.
“There’s a tension between those two perspectives,” said James Bushnell, a UC Davis economics professor who previously led research at the University of California Energy Institute in Berkeley. “You pull harder on one side and you’re giving up something on the other side. This is about threading the needle.”
For weeks, Brown has been bringing interest groups and lawmakers from both parties behind closed doors to hammer out a deal on how cap and trade should work after 2020.
Just some of the questions the factions are wrestling with: Should industry be able to comply with the law by funding carbon-offset projects in other states in addition to buying permits — a cheaper alternative, but with limited benefit to Californians? Should California place a limit on the price of permits sold at auction to avoid a surge in energy prices? Or would that defeat the purpose of capping emissions?
The ever-changing political landscape around cap-and-trade policy is nothing if not confusing.
The California Chamber of Commerce — which recently lost a lawsuit against the state over cap and trade, calling it an illegal tax — has since signaled support for an extension. And the oil lobby, which fought the program’s passage in 2006, now says cap and trade could help refineries with the daunting task of slashing their greenhouse gas emissions to 40 percent below 1990 levels by 2030 — aggressive goals the Legislature passed last year over industry objections.
“Now is the time,” state chamber President Allan Zaremberg told the Los Angeles Times in May. “Not a year or two from now. It gets harder, not easier.”
Why the about-face?
Cap and trade — as it’s structured today — gives businesses several ways to comply with the environmental regulations, including buying and trading permits. Without the program, it would be up to air regulators to set rules to force the needed emissions reductions in the next decade, which could prove more burdensome.
But some groups seeking “environmental justice” in low-income and working-class communities argue that cap and trade provides industry with too many loopholes and that it does little, if anything, to reduce air pollution plaguing industrial neighborhoods. Based on glimpses of early proposals circulating around the Capitol, they fear that Big Oil is having too much sway in negotiations.
“Right now, the governor is really acquiescing to the interests of oil in shaping the policy for the next 10 or 15 years — and I find that baffling,” said Parin Shah, a strategist with the Oakland-based Asian Pacific Environmental Network.
Activists and lawmakers in pollution-choked districts, such as Assemblywoman Cristina Garcia, D-Bell Gardens, are calling for the state to force plants and refineries to curb air pollution in industry-heavy areas as well as reduce carbon emissions.
Brown is developing a separate proposal to address air-quality concerns — one that will require only a simple majority vote — but Garcia and others say they won’t be satisfied unless it has teeth.
“I want to make sure California continues to be a leader on climate change while we are also improving air quality here in our backyard,” Garcia said. “I’m open to whatever combination of how this gets done, but I’ve been adamant that we cannot leave these communities behind.”
Meanwhile, legislators in more conservative districts are insisting that the proposal minimize the burden on industry so that businesses won’t leave the state and their constituents don’t get hit with higher gasoline prices and energy bills.
“That would be one of my highest priorities — doing everything that we can to make sure that we put into policy ways to buffer against drastic increases or what we call ‘spiking’ in energy costs,” said Assemblyman Tim Grayson, a moderate Democrat from Concord and the city’s former mayor. “This program is so important for me, no deal is better than a bad deal.”
Garcia, too, said there was no need to “rush to a bad deal.”
But some environmental groups — including the Environmental Defense Fund, which has been among the groups negotiating with the governor — say it is important to pass the bill this year. Not only will it help businesses plan ahead, they say, but it will bring certainty to the carbon market and encourage other states and countries to follow California’s lead.
“There is a good deal of urgency, and having the Legislature act this year with a two-thirds vote would definitely be the best outcome,” said Erica Morehouse, an attorney for EDF’s global climate program. “The regulatory certainty is a good thing for businesses, but also for the environment.”
As Brown has jumped into the debate in recent weeks, he has played a key role, according to Grayson and others present in the discussions.
“As we all know, the governor has never shied away from challenging issues,” Grayson said. “He invites them, almost. The governor has shown in good faith a tremendous amount of energy in moving this forward while listening to every side.”
Garcia, who heads the Assembly’s Natural Resources Committee, is the author of a cap-and-trade proposal that is now stalled in the Assembly. This spring, she led Brown on a tour of her heavily industrial district, which is criss-crossed constantly by diesel trucks.
“I think that visit impacted him. I think that as he’s having these negotiations, that visit is on his mind,” Garcia said. “I just need to make sure that heightened awareness leads to policy that improves the air quality and the health of my constituents. Otherwise the trip was in vain.”
