The Cap & Trade Debate Isn’t Just about Climate

John Gamboa is the Co-Founder of The Greenlining Institute and The 200; Jennifer Hernandez is an Environmental Attorney.

In less than three weeks, the latest political debate over California climate policy may be effectively over—taking with it one of the best opportunities in the foreseeable future for members of both parties to influence how the state responds to the threat of a warming climate.

The governor has asked the Legislature to agree by the June 15 budget deadline on legislation that would extend one of the state’s most prominent weapons against climate change: the five-year-old cap-and-trade system. With questions lingering about the current law’s legality, the administration is seeking the approval of a two-thirds majority in the Assembly and Senate, which will require support from progressive and moderate Democrats, and possibly a few Republicans, as well.

Remarkably, with the deadline looming, there is not yet any legislative agreement on how to proceed. But there is still time to focus on the expansive impact this decision will have on nearly every aspect of our lives—and to craft a policy that will work for all Californians.

However wonky it may seem, the cap-and-trade debate isn’t just an arcane discussion about carbon dioxide. This policy, like so many other climate measures, will significantly impact where and how Californians live and work—and will have far-ranging impacts on everything from the state’s poverty rate and the price of gas to what our communities look like and how people get to their jobs.

The Legislature should not—and must not—simply reauthorize this program, or any other climate measure, without taking all of these potential consequences into consideration. This means first demanding, and then reviewing and approving, the effectiveness of our current cap-and-trade policies in reducing global emissions—and finding ways to gauge the real economic costs these measures will have on California families.

California aspires to be a model for the world on how to combat climate change—and the state has much to be proud of—but we’re not there yet. If Californians want others to follow, we have to show neighbor states and nations how to adopt climate policies without impoverishing families or pushing our emissions somewhere else.

Many of today’s environmental advocates don’t seem to look at climate this way. They focus almost exclusively on the intricacies of our policies themselves and their own hopeful visions for a state where fewer people drive. In one recent report, for example, some of the most respected housing policy thinkers in the state make the case that if California could only build more high-density housing in a narrow subset of urban areas along the coast—where transit is already in place—greenhouse gas emissions from cars could be reduced by nearly two million metric tons per year, household utility bills trimmed by $5 a month, and monthly transportation costs lowered by $58. All while requiring people to spend only $38 more per month on rent—and less than $14,000 more for an average home.

Where do we sign up, right? What the study, like so many others, fails to account for is the social cost—and the economic unlikelihood—of this “infill-only” scenario actually coming to pass. The authors’ housing cost data doesn’t factor in the cost, for example, of relocating hundreds of thousands of people already living in existing lower-cost, lower-density homes in these areas. The study doesn’t account for the fast-growing fees many coastal jurisdictions are imposing to slow this very type of housing (as much as $100,000 per unit in some places). Nor does it account for the stark differences in the cost of land, which is between three and 10 times higher in coastal areas than inland California (and which is the biggest reason so many workers slog through three-hour commutes each day).

Most importantly, the study seems to accept the fact that this “preferred,” coastal-focused housing scenario will produce an average monthly rent of $2,702. Even without factoring in massive displacement, rising local exactions, and land costs that are likely to push development elsewhere, this number alone should give everyone pause. To pay that much rent, an “average” household would need to earn $97,200 a year! The median income in California today is only $62,000.

California has set some of the world’s most ambitious climate goals for itself, but if the state is going to achieve them through policy, that policy has to be grounded in real, verifiable data we can all agree on. After years of pressure, state leaders have adopted this approach on other issues (most notably transportation). But this new emphasis on accountability and transparency has not yet made its way into the climate field—and climate policy’s narrow focus is only expanding into other arenas.

When the Bay Area’s Metropolitan Transportation Commission decrees that 82 percent of all new housing in the region should be multi-family apartments—and that its climate policies will be paid for via a new regional tax of $1.75 per gallon of gas—it should acknowledge who will bear the greatest burden. (We can guess: low-income workers, mostly people of color, commuting from outside the region.) When the Governor’s Office of Planning and Research proposes to intentionally increase road congestion to make commutes longer—and force more people to use transit—it should also tell us which workers and employers will be most impacted. (Pretty much all of us, since less than 10 percent of jobs, even in our dense coastal areas, can be accessed within an hour via transit.)

When advocates for extending and reinventing cap-and-trade make similarly expansive climate proposals—calling for doubling or tripling the cost of carbon or for applying new carbon taxes on all products imported into the state—they should be required to explain how these new measures will impact prices. (Our best estimate: by increasing the cost of pretty much everything.)

Most climate policy in California today is shaped in the executive branch. After legislatures and governors set big goals on air quality or emissions or renewable energy, agencies like the California Air Resources Board and Office of Planning and Research are left to draft the guidelines and regulations that determine how these new rules are implemented—and the impact they have on everything from the price of gas to the cost of housing.

Because it requires a two-thirds vote, cap-and-trade can be different.

Over the next three weeks, every member of the Legislature, from both parties, will have an opportunity to make their voice heard—and to ensure this legislation is reauthorized only if its potential impacts on all Californians are taken into consideration.

It is a rare chance to bring real focus to the climate debate in California—and to make the state a leader on climate policies the world can truly emulate. The state’s environment, the economy, and our civil rights depend on it.

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