Cap and Trade: Boon or Boondoggle

I am not a fan of the new Cap and Trade Extension Law, so just know that this column does not praise the signing into law of AB 398 as most of the popular press has done since July. I am in good company in my concerns that California’s green future is in jeopardy because of it. Over 50 environmental organizations fought this version of a Cap and Trade Extension, including Food and Water Watch, the Sierra Club, Friends of the Earth,, the California Environmental Justice Alliance, the Courage Campaign, the Center for Biological Diversity, the Interfaith Climate Action Network, Consumer Watchdog and Citizens Climate Lobby.

The California Cap and Trade Program began in 2012 and is due to expire in 2020. It allows polluters to keep polluting as long as they pay a fee to the state in the form of buying carbon credits at quarterly auctions. Since 2012, California has enjoyed a slight decrease in greenhouse gas (GHG) emissions. At least 80 percent of this reduction can be attributed to enacting regulations, not to the Cap and Trade Program. These regulations have included mandates to increase renewable energy and improve fuel efficiency standards. Environmentalists were enthusiastic about SB775, a competing Cap and Trade Extension bill that would have put a higher price on carbon, mandating significant curbs on polluting and providing environmental justice for frontline communities suffering disproportionately from its effects. Industry and business did not share this enthusiasm; SB775 was never brought up for discussion in its first committee.

Major big supporters of AB398 included the Western States Petroleum Association (Big Oil), the Chamber of Commerce and enough Republicans to provide a challenge-proof two-thirds vote. Several amendments accepted at the last minute made it more palatable to cash-strapped Central Valley counties, big agriculture and others. Governor Jerry Brown pushed hard for AB398; it got tense at times with backroom deals and nasty threats.

The new Cap and Trade Law will take effect in 2020 and extend until 2030. One concern is that polluters will be provided more free carbon credits than in the current program. Calculations show that instead of providing any “cap,” GHG emissions may rise. Already it seems that carbon auctions have not generated the promised windfall of cash. In February only 16 percent were sold; in May only 2 percent were sold. Industries had enough free credits to meet their caps and didn’t need to buy any. Also, companies may bank credits, meaning that previously accrued credits can be carried forward, which enables increased pollution.

The legislature has already planned how they will spend future profits that may be imaginary. Whether the money will actually be collected to pay for the governor’s $1.5 billion green spending plan is seriously in doubt. Even if the legislature’s budgetary assumptions turn out to be accurate, is allowing the state to be bought off by polluters really a good bargain?

Another concern is the inherent unfairness of “carbon offsets.” The number of offsets has been increased in the new law. For example, a corporation such as Chevron (the largest stationary emitter of GHGs in California) is allowed to plant trees in the central valley while exposing the residents of Richmond to increasing amounts of pollution including nitrous oxide and sulfur dioxide, as well as particulate air pollution, These have caused an increase in the rates of asthma, heart disease and cancer among people living near these refineries – people who are disproportionately people of color. It’s worth noting that 75 percent of the crude oil imported into the United States is refined here and then exported for sale abroad.

As if this all isn’t bad enough, another provision of the law removes the regulation of air pollution from local control to the state. The state’s California Air Resources Board (CARB) has already prevented the refinery caps that were about to be passed this September by the Bay Area Air Quality Management District (BAAQMD). Due to state control, Chevron is now permitted to expand its operations, making way for the import and refining of much dirtier forms of oil, for exam for example, tar sands crude.

If you are wondering why two-thirds of both the Assembly and the California Senate passed this bill, it could be called political compromise, or corporate money’s impact on politics. Or racism. Or if you were sitting in the Senate Energy Committee chamber as I was, you would have seen Governor Brown scowling throughout the entire proceedings, imaginary whip in hand. He can be a scary fellow.

This article first appeared in the October 25, 2017 issue of the Rossmoor News. Author Carol Weed can be emailed at


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