Californians need an AFFORDABLE reauthorization of Cap & Trade
The simple reality is Sacramento’s climate policies are increasingly costly and taking a toll on residents and businesses alike. The cost of living in California is out-of-control, harming the economy and disproportionately impacting those who can least afford it. The affordability crisis presents a perilous political and economic minefield for Sacramento’s politicians. Voters are rightfully unhappy and will continue to hold elected officials accountable at the ballot box.
Which is why the ensuing discussion about Cap & Trade reauthorization is particularly thorny for legislators. Sacramento policymakers would be wise to heed increasing voter concerns and adopt an “affordable” Cap & Trade reauthorization as proposed by Governor Newsom.
Make no mistake, reauthorizing the state’s cornerstone climate strategy which delivers cost-effective emissions reductions is timely and necessary. Maintaining the program’s cost containment and leakage protection provisions will prove especially critical. Now is not the time for radical reforms being proposed by environmental and environmental justice organizations. Reducing or eliminating free allowances, eliminating utilization of offsets and other costly “reforms” will dramatically increase the costs of transportation fuel, energy, construction, food and other goods and services, further exacerbating the affordability crisis. Following the environmental playbook will also heighten the wrath of voters and fallout for Sacramento politicians.
Gasoline price impacts are the most troubling politically and economically. Analysis by the Legislative Analyst’s Office (LAO) and academics suggest transportation fuel prices could rise to $7-$8 per gallon within the next couple of years. The situation is worsened by the looming impact of two refinery closures which will certainly add significantly to upward pressure on gasoline prices.
An AFFORDABLE reauthorization will also require policymakers to invest the proceeds from Cap & Trade wisely. That means re-evaluating all investments and prioritizing those that deliver verifiable, durable and cost-effective reductions such as the state’s climate-smart agricultural programs, including the following:
Livestock Methane Reduction Programs:
The California Department of Food and Agriculture (CDFA) Livestock Methane Reduction programs are among the state’s most effective and cost-efficient climate investments. More than 300 methane reduction projects have been funded on dairies in the state, reducing more than 3 million metric tons of CO2e annually. These projects also provide tremendous air quality benefits for rural and disadvantaged communities as diesel trucks are being fueled with clean, renewable natural gas.
Food Production Investment Program (FPIP):
FPIP, managed by the California Energy Commission (CEC), provides grants to food processors to accelerate adoption of advanced energy and decarbonization technologies. Sixty FPIP projects to date will result in a reduction of 3.2 million metric tons of CO2e over their useful lifetimes.
Funding Agricultural Replacement Measures for Emission Reductions (FARMER) Program:
The FARMER program has a proven track record, with oversight from the Air Resources Board and implementation through local Air Districts, replacing older diesel tractors and equipment with cleaner alternatives. The program delivers immediate air quality and public health benefits, reducing over 28,000 tons of NOx, 1,600 tons of PM and 388,000 metric tons of CO2e emissions annually, while prioritizing disproportionately impacted areas.
Heavy-handed regulation is not the answer. Shifting away from incentive-based solutions would jeopardize the economic backbone of the San Joaquin Valley, accelerating the decline of industrial and agriculture jobs. Additionally, it would strain our food system at a time when one in five Californians faces food insecurity.
A balanced and affordable Cap & Trade program moving forward protects our environment, strengthens rural economies and ensures all Californians—especially those most in need— have access to clean air and nutritious food.