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State Legislature Approves Extension Of Landmark Cap-And-Trade Program To Combat Climate Change

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Governor Jerry Brown (Photo by David McNew/Getty Images)
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Update [8:50 p.m.]: In a major victory for Governor Jerry Brown, the state legislature has approved the package of legislation, extending the state's landmark cap-and-trade program until 2030.

In a vote that will likely stretch late into the night on Monday, the state Senate and state Assembly will consider Governor Jerry Brown’s proposal to extend California’s cap-and-trade program through 2030. If it's not renewed, the landmark environmental program will collapse after 2020.

We get it, state environmental legislation seems boring AF, but bear with us because it will probably be the deciding factor in whether or not your grandchildren can play like normal people or end up waving at each other from inside of their own individually enclosed, air-controlled pods. Kidding, sort of.

If you live in California, you've likely heard the term "cap and trade" before—and you've probably been hearing a lot more about it as of late, as the state legislature debates extending our landmark cap-and-trade program.

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The pioneering program, which went into effect in 2013, aims to combat climate change using a market-based approach. On Thursday, Governor Brown went all in with an extremely dramatic speech where, among other things, he told lawmakers that the cap-and-trade extension would be the "most important vote of your life."

“Cap-and-trade is the way forward,” the governor said, calling climate change a “threat to organized human existence.”

The nuts and bolts
A cap-and-trade system essentially puts a price on carbon emissions. The cap places a clear limit on total greenhouse gas emissions, with the limit being decreased over time. Under the program, the state's biggest polluters can either choose to cut emissions, or obtain permits to pollute (some were given for free, and some can be bought through an auction system).

Those finite permits can then be bought or traded (hence the trade in cap and trade) on what essentially amounts to a stock exchange for carbon emissions. The program is intended to dramatically reduce greenhouse gas emissions while also providing some flexibility for companies. “We want to reduce the amount of pollution, but we want to do it in a way that isn’t too costly to the economy,” UC Berkeley economist and energy analyst Severin Borenstein explained to KQED back in 2012.

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Why it's such a big deal
The E.U. has been operating a cap-and-trade program since 2005, but California's was the first of its kind in North America. It's considered a model for the nation, especially given California's role as an environmental leader. The L.A. Times has characterized cap and trade as "California’s signature tool against climate change."

"The whole point of Governor Brown's intense fight for this is to the show the rest of the world that cap and trade can be a model for other states, for other countries, for the rest of the world," University of Southern California public policy professor and political analyst Sherry Bebitch Jeffe told LAist.

How important is this to Governor Brown's legacy?
Despite what the governor may have said in his speech and tweet, the success of the bill will be "extremely important" to Brown's legacy, according to Jeffe.

"It is important to his political legacy, but it is also important to him," she continued. "Don't underestimate the fact that he truly, truly believes that this is—as he said—the most important vote that legislators will take."

The background
Back in 2006, California passed AB 32, a watershed piece of legislation intended to combat climate change. The California Global Warming Solutions Act of 2006, as it was known, requires the state to reduce overall greenhouse gas emissions to 1990 levels by 2020, and to a level 80% below 1990 levels by 2050. The state's cap-and-trade program was an outgrowth of AB 32, and is intended to meet the emission regulations set forth in the law.

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The first quarterly auction of emissions allowances for the state's cap-and-trade program was held in November, 2012, and the initial emissions cap went into effect on January 1, 2013.

Just how dramatic was Governor Brown's speech?
Here's an excerpt: “You’re going to be alive in a horrible situation where you’re going to see mass migrations, vector diseases, forest fires, Southern California burning up. That’s real, guys. That’s what the scientists of the world are saying. I’m not here about some cockamamie legacy that some people talk about. This isn’t for me. I’m going to be dead. It’s for you.”

What are they actually voting on?
Lawmakers are considering two bills that are being viewed as a package of sorts. AB 398, which is sponsored by Assemblymember Eduardo Garcia (D-Coachella), would extend the state's cap-and-trade program until 2030. Companion air quality improvement bill AB 617 includes tools that will hold regulators and industry accountable for emissions in local communities.

There is also a third, related bill: Assembly Constitutional Amendment 1, a potential 2018 ballot measure that would require onetime supermajority approval in 2024 (as opposed to the regular majority that's typically required) on decisions regarding how to spend cap-and-trade funds. This is intended to give California Republicans more of a say in how the funds get spent.

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Why the supermajority?
In order to protect against future legal threats (the cap-and-trade program is no stranger to legal threats) Governor Jerry Brown is attempting to get the AB 398 passed with a supermajority, or two-thirds of the vote. However, in order to achieve that supermajority, the bill will need 27 state Senate votes and 54 state Assembly votes, which is the exact number of Democratic seats in both houses. To further complicate things, a Democratic Assemblywoman will be out of Sacramento today due to a longstanding family engagement, meaning at least one Republican vote will be needed.

The bill doesn't actually need the supermajority to pass—it will just help safeguard against future legal threats that identify it as a tax increase. "A tax increase needs a two-thirds vote. In order to isolate this legislation from court challenges, the governor wants a two-thirds vote out of the box," Jeffe explained.

Who supports the plan?
California State Senate President pro Tempore Kevin de León has called the cap-and-trade extension “a legislative unicorn” because it has support from business, labor, energy, and environmental groups. Of course, it's not that simple. The L.A. Times reports that although business interests have "largely come together behind the plan," it's divided the environmental community to some degree, with pressure from groups who don't think it's strong enough. Here's how the Times breaks it down in their story:

The proposal has exposed rifts among environmental advocates. Some national organizations, such as the Environmental Defense Fund and NextGen Climate, founded by billionaire activist Tom Steyer, have embraced Brown’s plan. Others, such as the Sierra Club and environmental justice groups focused on battling local pollution, remain staunchly opposed, arguing the package is too friendly to industry concerns.

The NRDC, a national environmental advocacy group, has called the concessions to industry "bitter pills," but still endorses the legislation. “The legislation represents a big step forward to continue California’s global climate leadership," Alex Jackson, legal director of NRDC’s California climate project, said in a statement. "The concessions to industry are bitter pills, but on balance the package ensures our emissions limits are enforceable against polluters and secures critical gains to improve air quality for millions of Californians. The world is watching for California to chart a path through the climate denial and obstruction coming from the White House - and California is yet again poised to deliver.”

What's the latest?
As of 5:30 p.m., the state Senate has passed the air quality bill and unofficially passed the cap-and-trade bill, according to Times reporter Liam Dillon. It is expected to go to the Assembly sometime after 6 p.m., depending on when it passes the Senate.

Update [7 p.m.]: The state Senate has approved AB 398, the cap-and-trade extension in a 28-12 vote (yes, that's a supermajority). One Republican, Senator Tom Berryhill of Modesto, voted in support. The state Senate has also approved AB 617, along with Assembly Constitutional Amendment 1, a potential 2018 ballot measure that would require onetime supermajority approval in 2024 (as opposed to the regular majority that's typically required) on decisions regarding how to spend cap-and-trade funds. This is intended to give California Republicans more of a say in how the funds get spent.

The state Assembly is currently debating the cap-and-trade bills.

Update [8:40 p.m.]: AB 398, the cap-and-trade extension, has passed the Assembly with a vote of 55 to 21 (yes, that's a supermajority). AB 617 also passed the Assembly, meaning both bills have been approved.

"Tonight, California stood tall and once again, boldly confronted the existential threat of our time," Governor Brown said in a statement on Monday night. "Republicans and Democrats set aside their differences, came together and took courageous action. That’s what good government looks like."