California’s state legislature today reached a two-thirds supermajority to extend the state’s cap-and-trade program to 2030. This statement forecasts what impact this vote will have on the state’s carbon market, and can be attributed to Energy Innovation Director of Research Chris Busch.
“Passage of AB 398 and AB 617 stabilizes California’s carbon market and sets the state up for equitable, clean economic growth. Our market analysis and the legal certainty two-thirds approval provides lead Energy Innovation to forecast that future auctions will sell out completely in the coming years, at least through 2020.”
“Our analysis finds adopting this legislation should generate about $1 billion in additional carbon allowance auction revenue between now and 2020 for the Greenhouse Gas Reduction Fund (GGRF), and will generate over $26 billion in new revenue for the GGRF from 2021 to 2030.”
“Surpassing the two-thirds hurdle to extend California’s cap-and-trade program required compromise, but the alternative was no cap-and-trade program at all, and failing to extend this world-leading program would have undercut our state’s green economic engine. Cap-and-trade has already generated $3.4 billion in new clean energy investment across the state and helped create 500,000 green jobs – with just 12 percent of America’s population, California has created 25 percent of its total economic growth.”
“This legislation will also help address environmental justice concerns – 35 percent of future revenue will be earmarked toward disadvantaged and low-income communities, 50 percent of allowed offsets will deliver environmental benefits to Californians, and AB 617 provides separate new measures to monitor and reduce local air quality. A robust effort to build on AB 617 to address local air quality could help mend some of the rifts and hard feelings that have long existed and were observed anew in this recent debate”
“Californians should celebrate this important milestone – extending cap-and-trade locks in a crucial cost-effective policy tool, will help the state make progress on air pollution hotspots, and signals to the world that California is going forward in the fight against climate change.”