California Democrats Unveil Plan to Revamp Cap-and-Trade

SACRAMENTO, Calif. (CN) – California’s Democratic leaders unveiled proposals Monday that would extend California’s contentious cap-and-trade system and allow the state to continue taxing businesses for greenhouse gas emissions until 2030.

The pair of environmental bills would extend California’s cap-and-trade system past its 2020 sunset date along with a bevy of modifications to the embattled emissions tax. The changes include mandates for oil and industrial facilities to update old equipment, enhanced civil penalties for polluters and the repeal of a controversial fire-prevention tax on rural landowners.

The renewal plan was crafted by Gov. Jerry Brown and state Senate and Assembly leaders, and lawmakers can take up the proposals as soon as Thursday. Extending the program requires two-thirds approval in both legislative bodies.

Extending the cap-and-trade program, the lucrative linchpin of California’s climate-change policy signed in 2006 by Gov. Arnold Schwarzenegger, would be a legislative victory for Brown in his final term.

The program requires businesses to obtain permits for carbon emissions and allows them to purchase additional use permits if needed.

Revenue generated from the permits funds major state infrastructure projects, including the high-speed rail project. Recent emissions auctions have routinely posted sub-par results, leaving critics and lawmakers demanding reforms to the current system.

“The Legislature is taking action to curb climate change and protect vulnerable communities from industrial poisons,” Brown said in a statement.

Democrats said extending the program is critical to continue funding California’s ambitious global-warming policies.

“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. All communities deserve clean air, benefits from strong climate actions and a strong green economy,” Assembly Speaker Anthony Rendon said in a statement.

The plan gives the California Air Resources Board the ability to cap the price of carbon permits and prevents local municipalities from enforcing stricter standards on businesses. It also includes a statewide program that will monitor air quality in neighborhoods and requirements that auction proceeds are spent in the cities most impacted by air pollution.

If the plan is approved, electric utilities will also be exempted from sales tax on certain construction and equipment costs related to facility updates.

Under the plan, the state would nix a fire-prevention tax on homeowners living in fire-prone areas. An estimated 800,000 homeowners currently pay an annual $153 tax for the state’s rural firefighting costs.

Critics and state Republicans call the fire tax unconstitutional and are fighting the fee in court.

Brown’s announcement of the cap-and-trade extensions comes after a major victory in April, when a state appellate panel ruled that the state’s current cap-and-trade plan is legal and does not exceed the Legislature’s authority. Passing the extension will require Brown and party leaders to sway a group of moderate Democrats that represent agricultural and business-aligned districts.


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