On Wednesday, Senate leaders released a new proposal for spending a portion of the revenues from the State’s Cap-and-Trade auction program. The proposal, which comes as the 2016 Legislative session enters into its final two weeks, presents a spending plan for around $1.1 billion of the estimated available monies in the Greenhouse Gas Reduction Fund (GGRF), leaving approximately $800 million in reserve. The Assembly is also expected to propose its own Cap-and-Trade spending plan in the coming days, and the Governor will also be part of the discussions going forward.
The Senate proposal is decidedly urban-focused, with much of the funds dedicated to programs that benefit disadvantaged communities in urban areas. While the plan does allocate funds to a few programs that would benefit rural communities such as forest health projects, landfill organics diversion infrastructure, and wood stove replacement programs, the amounts are relatively small and will not make much of an impact on those programs in the near or long term. The Senate has lauded the proposal as beneficial to the poor and disadvantaged citizens of California; however, the plan will provide almost no benefit to poor, disadvantaged Californians living in rural, forested communities.
In recent weeks, legislators have expressed concern about allocating Cap-and-Trade dollars due to a pending industry lawsuit challenging the legality of the program. If the legal challenge succeeds, the State could be made to reimburse participants in the auction for the carbon credits they were forced to purchase. Legislators were also alarmed by the underperforming April Cap-and-Trade auction, which brought in a mere 2 percent of the revenue expected by the State. Results from the most recent auction held on Tuesday are expected to be released next week, and could influence the Legislature’s final decision on how much of the GGRF is ultimately spent.