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 last minute 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. While the Assembly seems to be working toward affordability, the Senate proposal is missing the mark.

Make no mistake, reauthorizing the state’s cornerstone climate strategy which delivers cost-effective emissions reductions is timely and important. 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. This will prove especially costly as Los Angeles seeks to rebuild following the catastrophic fires earlier this year. Ignoring affordability concerns 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. Again, the Assembly appears to understand the importance of climate ROI, but so far the Senate has been silent about their intentions.