Nineteen years ago, during actor Arnold Schwarzenegger\u2019s governorship, he and the Legislature created a program that would, in theory, reduce California\u2019s emissions of carbon dioxide and other gases deemed to affect the planet\u2019s climate.<\/p>\n
The plan, dubbed cap and trade, authorizes the California Air Resources Board to conduct quarterly auctions of emissions allowances which refineries, electric power generators and other industrial facilities purchase to offset their emissions. It\u2019s an alternative to actually reducing emissions or financing other projects to cut them.<\/p>\n
Once purchased, the allowances can be sold and traded back and forth. As the auction prices increase over time, emitting facilities would, in theory, be motivated to make reductions.<\/p>\n
Proceeds from the auctions have steadily increased and today\u00a0run about $5 billion a year<\/a>, which the state is spending on climate-related projects, officials boast.<\/p>\n \u201cThe program\u2019s proceeds have funded nearly $33 billion in investments across the state and cut carbon pollution equivalent to taking 1.3 million gas-powered cars off the road,\u201d Gov. Gavin Newsom\u2019s\u00a0proposed 2025-26 budget declared<\/a>.<\/p>\n The program is due to expire in 2030, and Newsom wanted the Legislature to extend it to 2045, the date when California is supposed to achieve carbon emission neutrality.\u00a0Legislators balked at a simple extension<\/a>\u00a0and, instead, insisted on making some changes that tightened the number of emission allowances and gave lawmakers more authority over spending the revenues.<\/p>\n The program gained a new name, cap-and-invest, which implies that, as the auction proceeds have reached multi-billion-dollar levels, politicians\u2019 chief focus for how the money is spent has changed from emissions reduction.<\/p>\n As a\u00a0new report on the revisions from the Legislative Analyst\u2019s Office\u00a0<\/a>points out, cap-and-invest funds \u201ccan continue to be viewed as akin to tax revenues and be legally available to expend for any purpose.\u201d In other words, while the program is touted as financing emission-reducing programs, its billions in revenue can be spent on anything a governor and legislators want to finance.<\/p>\n