California is poised to launch a new wave of investment and economic growth. In November, the state will conduct its inaugural auction of emission allowances under California’s Cap-and-Trade program. This market-based program is an important component of the Global Warming Solutions Act, and part of a portfolio of smart strategies that will transition California to a clean energy economy under AB 32.
When this historic “price on pollution” kicks in, it will set a strict limit on pollution from California’s largest sources, motivating investors, innovators and entrepreneurs to deliver solutions that will keep us under the limit at the least cost. This innovative strategy is typical of the creativity and entrepreneurship that have always been a key part of how we do business here in California.
As speaker of the state Assembly, I authored and fought for the passage of AB 32 because I knew we were on the cusp of an extraordinary opportunity. We could limit pollution, protect public health and spur a clean energy revolution at the same time. We built the system in order to attract investment, and it is succeeding. Venture capital for clean energy is flowing into California in record amounts since AB 32 was signed, and jobs in that sector are growing much faster than other parts of the state’s economy.
When AB 32 was passed, we in the Legislature recognized that a market-based program like Cap-and-Trade had a range of environmental and economic benefits to offer. Cap-and-Trade keeps compliance costs down in California through a variety of mechanisms. Offsets, which are low-cost greenhouse gas cuts beyond the cap, are a critical tool. A proposed offset for rice will reap benefits for farmers in California and other rice growing states such as Arkansas, while similar proposals can help pull potent gases from mines—expanding the reach of California’s system to West Virginia and keeping miners safe at the same time. Not only does this tool keep the cost of compliance down, but the sale of pollution permits create revenue that can flow to technologies and programs that benefit the environment and the economy.
Now, the State has the responsibility to ensure that the forthcoming cap-and-trade proceeds get invested in ways that further reduce dangerous pollution and stimulate California’s economy.
Auction proceeds can boost the state’s rapidly expanding clean energy economy, encourage in-state investment, and create jobs while simultaneously reducing greenhouse gas emissions and furthering the intended goals of AB 32. Critics have misconstrued the State’s commitment to using revenues generated from the Cap-and-Trade auction to advance California’s emission reduction goals, but it is critical that decision-makers stay focused on what’s best for our state: continuing to support the fastest growing and cleanest parts of our economy; and resist efforts by those intending to undermine such an opportunity.
I am proud of all the progress made in developing the nuts and bolts of AB 32 over the past five years. Businesses are embracing the vision of a prosperous and profitable clean energy economy. We must not make a trade-off between environmental and economic benefits when we can achieve both.
I have no doubt that, by putting a price on pollution, we will see a surge of innovation we cannot even now imagine. California has always been on the leading edge of technological innovation. With implementation of AB 32 just around the corner, we will continue to do what we do best: set the bar high and lead the way into the future.