CA Legislature Passes Bills to Reauthorize Cap & Trade, Low Carbon Fuel Standard

California’s Legislature has passed a package of bills to extend the state’s Cap & Trade program and Low Carbon Fuel Standard to 2030.  The bills passed with a 2/3 vote, which provides much greater legal certainty for the programs than they have had for the past decade.  Although California extended AB 32 with legislation – SB 32 – that passed in 2016, SB 32 passed with only a majority vote.  That was sufficient to extend regulatory programs to reduce climate pollution and to increase the required reduction to a 40 percent reduction by 2030.  The Governor wanted a 2/3 vote for extension of the Cap & Trade program, however, since it involves an optional fee to purchase allowances and could be subject to legal challenges without a 2/3 vote.

The three bills included in the 2/3 vote are:

1) AB 398 (E. Garcia) – extends Cap & Trade and the LCFS programs to 2030; states that the intent of the Legislature is that cap & Trade revenues will focus on reduction of short-lived climate pollutants and other air pollutants, healthy forests and sustainable agriculture, low and zero carbon fuels, and R&D related to clean energy and climate issues.

2) AB 617 (C. Garcia) – increases monitoring and penalty provisions for air quality protection.

3) ACA 1 – requires that an initiative be placed on the 2018 ballot that asks voters to require a 2/3 vote in 2024 to authorize expenditure of Cap & Trade revenues.