California’s Extends Cap And Trade (Which Means Clean Tech Isn’t Going Anywhere)

by Anna Gretz
July 20, 2017

In the wake of SB 700’s failure to pass (or even get a vote) (link link link), many clean energy advocates were left a bit downtrodden. [Come on, California! You’re supposed to be the good guys! Throw us a bone over here!]

Enter: Governor Jerry Brown to the Rescue.

California’s governor stepped up to the plate with some strong speech and a bit of attitude. On the table was a group of bills that would extend California’s program for capping greenhouse gas emissions, one they have been famous for. Brown got in front of lawmakers before the vote and said that the bill would be the “most important vote of your life.”

“This isn’t about some cockamamie legacy. This isn’t for me. I’m going to be dead. It’s for you, and it’s damn real.” - Governor Jerry Brown

Well, people listened, and after an approval late Monday night, a triumphant Jerry Brown tweeted: “Tonight, California stood tall and once again, boldly confronted the existential threat of our time. Republicans and Democrats set aside their differences, came together and took courageous action. That’s what good government looks like.” Indeed.

The same climate advocates that were shuffling their feet after the SB 700 ordeal were celebrating along with Brown after the extension of the program, which is known as “Cap and Trade.” The passage of the bill shows the residents of California, as well as businesses everywhere, that California is still very dedicated to clean technology. Tom Steyer called it “the next step in building the strongest possible program to protect our air, water, climate and economy.” Well done, Governor Brown.

What exactly is the Cap-and-Trade Program?

The Californian-born program first came on the scene in 2013, and made the rest of the world do a serious double-take. The cap-and-trade program uses a market-based mechanism to lower greenhouse gas emissions, and is one of the most aggressive programs of its kind in the entire world. The initial goal of the trading system was to reduce greenhouse gas emissions by more than 16 percent before 2020, which went along perfectly with California’s broader greenhouse gas reduction goal, which debuted in 1990.

When the cap-and-trade program hit the ground on January 1st of 2013, it put the most heat on large electric power plants, as well as larger industrial plants. Two years later, fuel distributors were added to the list, bringing the grand total of affected businesses to 360, and cut a huge chunk out of California’s greenhouse gas emissions.

The unique part of the program isn’t the cap component, but the trading system, which let companies buy and sell their emission allowances on an open market. So while there is a clear limit on the greenhouse gas emissions each company is allowed, this limit is broken up into tradable allowances that can be auctioned off or bought on a pretty regular basis. Each company has to give up the number of allowances equal to their actual emissions during each “compliance period,” but if anyone has more allowances than they actually need, they can profit from their good behavior. In short, it’s a very cost-effective, cooperative way to seriously reduce greenhouse gas emissions. This is why it was so important that California continue the program past its original expiration date in 2020.

Then it’s smooth sailing from here?

Yes and no. California’s ambitious program wasn’t without it’s snags. The Chamber of Commerce brought forward a lawsuit against the program, and though the Supreme Court threw it out, faith in the overall mechanism wavered a bit, and the allowance trading auctions have not always seen big crowds. On top of that, the new extension of the program had to make sure that it was up to par with a more recent bill that requires a 40 percent cut in greenhouse gasses by 2030. Luckily, the new extension of the cap-and-trade bill is up to snuff.

The extension bills actually do more than just lengthen the expiration date of the original program. A tag-along bill, AB 617, also addresses local air pollution, recognizing the fact that local communities, especially those near industrial sites, have not seen much improvement in their air quality.

One of the best part of the new cap-and-trade bill is that a pretty sizeable pile of cash is going to be given to cleantech-related programs. Almost $3.4 billion has been promised to state agencies to put greenhouse reduction programs into action. People are looking into using the funding for disadvantaged communities, and transportation programs, like rebates for electric cars.

The passage of the bill also sends a very strong signal.

Renewing and rejuvinating the cap-and-trade program in California didn’t just require a riled-up Jerry Brown; it also needed some bi-partisan cooperation. That meant some hefty Republican support for fighting global warming--not something that’s easily attained. A total of eight Republicans joined Democrats to make the program happen, though Republicans in Washington have been actively resisting similar efforts to fight climate change.

“California Republicans are different than national Republicans,” said Assembly Republican leader Chad Mayes, who was one of the advocates for bi-partisan support. “Many of us believe that climate change is real, and that it’s a responsibility we have to work to address it.” Governor Brown added, “Republicans and Democrats set aside their differences and came together to take courageous action.” According to Brown, if the government can’t do that, then what is it for?

Californian lawmakers stood together to make a decision that they believed was right, and good for the whole of the state, and the wider community. As a whole, Californians have continued on the path toward cleaner and greener energy for decades. This bill adds yet another notch in the belt of the state’s cleantech goals, and should encourage all clean energy advocates that there are, in fact, lawmakers fighting beside them for their cause.

We draw this conclusion: clean technology isn’t going anywhere. The momentum for the use of responsible, reliable energy from solar power (and others) are just gaining momentum, especially in the state of California. It makes us proud to be here, and hopeful about the future of energy storage.