In Defense of Cap and Trade
When it came to relocating their U.S. headquarters, electric bus manufacturer Proterra followed the market.
In 2015, Proterra set up shop in Burlingame, California in response to our state’s growing appetite for electric vehicles. The company later opened a second facility in City of Industry, bringing a total of 100 new jobs to California with plans to nearly double that by the end of this year. It’s no coincidence that California remains a pioneer on zero-emission vehicles and the jobs they attract. Our bold clean air laws make this possible.
One of California’s tools in fighting climate change and promoting clean air is the emissions reduction program known as cap and trade. Cap and trade is one part of California’s broader approach to growing clean energy jobs and investment — and it works best in concert with the state’s full suite of policies, including the Low Carbon Fuel Standard, which encourages the use of low-carbon fuels like the electricity that powers Proterra’s bus fleets.
Just this month, the California Court of Appeal validated the cap-and-trade program. With the court’s approval, all eyes are on the road ahead.
While cap and trade is naturally not without detractors, it enjoys widespread support from the business community because it provides a flexible way to reduce greenhouse gas emissions at the least cost. For communities with disproportionate pollution in their backyard, the program is best complemented by direct emissions reductions requirements, which Valley Vision and the Silicon Valley Leadership Group also support.
We work with leading businesses throughout California who care about climate change and clean air and understand the role businesses must play in cutting emissions to ensure California meets its targets. They agree that the flexibility of cap and trade is one of its biggest assets.
Under cap and trade, businesses have control over their route to compliance: they can be aggressive about reducing emissions, or they can purchase allowances. Rather than a one-size-fits-all approach, policymakers carefully crafted a practical, effective program that makes sense for businesses and benefits all Californians.
California’s cap-and-trade program offers broader social benefits as well. To date, the state Legislature has appropriated $3.4 billion in cap-and-trade revenues to bring clean energy jobs and investments to a wide variety of California neighborhoods. By law, at least 35 percent of these investments must help disadvantaged communities — so far, it has been closer to 50 percent.
The results speak for themselves.
Cap and trade proceeds have funded nearly 30,000 home energy efficiency installations, more than 105,000 rebates for zero-emission and plug-in hybrid vehicles, more than 1,100 affordable homes, more than 6,200 neighborhood tree plantings, and more than 200 transit improvement projects across the state.
In Sacramento, cap and trade is funding the launch of an electric vehicle car-sharing program this spring in one of the city’s most disadvantaged neighborhoods, bringing accessible, affordable, climate-friendly transportation options to families who may not otherwise have access to personal transportation.
Investments like these inspire impressive ripple effects throughout the economy, demonstrating how California’s approach to confronting climate change goes hand-in-hand with creating a thriving, more equitable economy. To learn more about how these climate investments have benefited your community, visit caclimateinvestments.ca.gov.
With the program set to sunset in 2020 and three years of future emissions allowances now being sold, California is at a crossroads and the clock is ticking. Do we reinvest in cap and trade and strengthen it moving forward, or do we stumble and lose momentum?
Extending cap and trade beyond 2020 will send a powerful signal to businesses to continue investing in clean technology, providing the market certainty that comes with regulatory continuity. It will give us the tools to build on our success, continue linking with other markets, and generate greater emissions reductions over time. This move will help California continue to serve as a beacon to other jurisdictions around the country and the world that seek to pair emissions reduction with robust economic growth.
Californians are resilient and innovative, so it comes as no surprise that our effort to combat climate change also attracts and creates good jobs. Now is the time for leaders to build toward a cleaner California by recommitting to cap and trade.
Meg Arnold is Managing Director at Valley Vision.
Tim McRae is Vice President, Energy, at the Silicon Valley Leadership Group.
This article originally appeared in Capitol Weekly on April 19, 2017.