On July 17, 2017 the California legislature approved an extension of the state’s greenhouse gas cap-and-trade program from 2020 to 2030. Cap-and-trade is a key program in the state’s efforts to meets its 2030 greenhouse gas reduction goals of 40% below 1990 levels covering emissions from industrial facilities and electricity and natural gas suppliers.
Governor Brown and legislative leaders have worked for several months on a package of bills that could achieve a 2/3 majority in the legislature, insulating the cap-and-trade program from additional challenges under Proposition 13 and providing the state with considerable discretion in spending revenues generated by the program. This grand bargain includes a cap on the price of emission allowances sold under the program, measures to reduce emissions of non-greenhouse gas pollutants from industrial facilities and refineries, an increase in maximum penalty for violations of state air rules, and tax credits for energy producers. In extending cap-and-trade, the legislation also blocks an effort by the Bay Area Air Quality Management District (“BAAQMD”) to cap greenhouse gas emissions from Bay Area refineries.