The California Assembly on Tuesday passed a bill to extend the state’s ambitious program to fight climate change beyond 2020, but minutes later it posted disappointing results from an auction of carbon permits that is key to the plan.
California’s program to cap emissions and trade carbon permits is a crucial component of a broader effort to reduce the state’s output of heat-trapping greenhouse gases to 1990 levels by the end of the decade.
But it has come under fire from critics who have said the program suffers from a glut of permits, reducing the incentive for businesses to cut emissions and curtailing revenue from a program that funds key low-carbon initiatives such as the state’s high-speed rail project.
The Assembly voted 42 to 29 on the bill, known as SB 32, which goes back to the Senate for an up-or-down concurrence vote by the end of August.
California Governor Jerry Brown on Tuesday said he was ready to sign the legislation into law, which would require the state to slash its emissions 40 percent below 1990 levels by 2030.
“Today, the Assembly speaker, most Democrats and one brave Republican passed SB 32, rejecting the brazen deception of the oil lobby and their Trump-inspired allies who deny science and fight every reasonable effort to curb global warming,” Brown said in a statement.
California sold just a fraction of the carbon permits offered to cover emissions this year, receiving the minimum price at an auction last week, regulators said on Tuesday.
Carbon market participants said the weak auction results were an indication that the program is oversupplied with permits and that businesses are uncertain about the program’s future, but added that passage of legislation to extend it should raise demand.
The California Air Resources Board, which regulates the program, has said unsold allowances and low prices are an indication that emissions reductions are occurring beyond the program’s annual targets.
But critics cited the results as an indication that the program is not working.
“Today’s failed results are yet another reminder that this government program is inherently troubled and should be abandoned,” Senate Republican Leader Jean Fuller said in an email.
The state on Tuesday said it failed to sell any permits offered to cover carbon emissions in 2016 and sold just 660,560 of the 10 million permits it offered to cover emissions in 2019, at the auction floor price of $12.73 a tonne.
That money will go into the state’s greenhouse gas reduction fund, which funds low-carbon projects.
The majority of the allowances the state sold at the August auction were permits consigned to the state by electric utility companies and do not provide revenue for the state fund.
The cap and trade program has raised $4 billion through its quarterly auctions since launch in 2013.
Last week, Senate President Pro Tempore Kevin de Leon unveiled a plan for $1.2 billion in unspent cap-and-trade revenue that gives priority to improving air quality in low-income communities in Los Angeles and the Central Valley.