How California struck a greenhouse gold rush with cap-and-trade fees

Yesterdaybrown, California’s Democratic Legislature rammed through two new ambitious climate change proposals to make sure its cap-and-trade cash cow doesn’t expire. The proposals would also attempt to reduce the state’s carbon footprint, boost the use of renewable energy to 50 percent in 15 years, and extend the length of its money-making cap-and-trade program indefinitely.

In California, Gov. Jerry Brown’s clarion call to limit CO2 emissions has been met with astonishment by fiscally conservative Republicans, especially in a state drowning in debt, inordinately high taxes, mass migration of talented workers, all while dealing with a naturally occurring four-year-long drought. The new proposals (Senate Bill 32 and AB 1288) being rubber stamped into law by the Democratic majorities in Sacramento are being pilloried by Republicans who claim these new regulations are akin to “coastal elitism that would kill working class jobs.”

So why are Democratic lawmakers in California determined to pass even more aggressive climate change rules that will run roughshod over the very people it claims to protect? According to GOP lawmakers, just follow the money. “The package would mean the government will pick economic winners and losers, raise utility and gasoline prices, and drive out good-paying jobs just so California can feel good about leading an environmental fight.” And those rate and fee increases aren’t lowering CO2 emissions (according to NOAA), but they are channeling a river of cash into a bankrupt state.

California’s cap-and-trade program, better known on the streets as AB32, allows for utilities and companies to emit CO2 if they buy carbon credits, and to levy taxes “on companies that produce gasoline and other fuels” beginning this year. Those taxes are then passed onto consumers in the form of higher gas prices. In fact, California has the highest gas prices in the country, surpassing even Alaska and Hawaii.

According to a March 2015 report in USA Today, California gasoline must meet a “range of specifications not required” by any other state, which forces gas stations to buy gasoline from refineries primarily in California. Due to this restriction, gasoline prices shot up 80 cents a gallon after a petroleum processing plant just outside Los Angeles exploded in April, shutting down refinery operations.

Worse still, at the beginning of this year drivers paid “45.39 cents per gallon in state taxes and fees,” making it the second highest in state and federal taxes per gallon. As of press time, a gallon of regular gas in California averaged $3.67, 30 cents higher than Alaska, which is the second-highest state followed by Hawaii. If you happen to live in or around San Francisco, Los Angeles, or another big city, expect to pay about $5 for a gallon of regular gasoline.

Now Gov. Jerry Brown wants to spend the fees and taxes collected so far on this cap-and-trade scheme: $2.23 billion. As the Sacramento Bee noted in an editorial, “lawmakers should confront a fundamental question: Will cap-and-trade revenue keep rising, or skid to an abrupt halt?” That’s because all of these onerous regulations imposed by California’s Democratic legislature were passed on a majority vote, not a two-thirds majority.

They are now being challenged in court by the California Chamber of Commerce, which argues that this cap-and-trade revenue are proceeds from a tax. The state says otherwise. The California Court of Appeals in Sacramento is sorting out the mess created by Democrats when they passed AB32 in 2006. “A chamber victory could unravel California’s cap and trade as currently practiced,” the Bee writes.

One of the reasons it’s being challenged is that “California law requires a two-thirds vote of the Legislature to approve taxes. Lawmakers passed Assembly Bill 32 (AB32), the 2006 legislation that created cap and trade, by a simple majority vote.” Now the Assembly wants to pass these new bills by another majority vote, which could invite new court challenges. It would also bypass those pesky money-conscious Republicans.

There’s no doubt that the cap-and-trade program brought in a green windfall for the state by taxing CO2 emitters. Both lobbyists and Democratic lawmakers are foaming at the mouth on how to spend this new-found money. As the Bee notes, the “Senate-Assembly budget conference committee will begin taking up competing cap-and-trade spending plans. For every notion about how to spend the $2 billion-plus, there is a lobbyist, or maybe 10.” Brown, of course, is cheerleading that lawmakers earmark $500 million for his own pet project: the high-speed rail that no one wants or needs.

The AB32 law does require that the money collected through its cap-and-trade program only be spent on reducing greenhouse gas emissions. That’s why proposals to spend $4 million on wiping out the mosquito population seem “like a stretch” to critics. Some of the proposals being floated include investing in solar energy, electric vehicles, wind farms, and helping low-income families buy high-mileage vehicles (sound familiar?). What is obvious is that Democratic lawmakers are positively giddy at the greenhouse gold rush, never imagining they’d have nearly $2.5 billion flowing into their respective districts.

By passing these new climate change rules and regulations, they all but ensure the money spigot stays open. “Senate Bill 32 by Sen. Fran Pavley, D-Agoura Hills, and AB 1288 by Speaker Toni Atkins, D-San Diego, would extend the original bill by requiring further greenhouse gas reductions, and, presumably, continuing cap and trade beyond 2020,” The Bee writes. It will also keep picking the pockets of California residents for decades to come.