At the end of July, California Governor Jerry Brown signed into law an extension of the state’s innovative cap-and-trade program that was slated to expire in 2020. First signed into law by former governor Arnold Schwarzenegger and implemented in 2012, the program has been massively popular among California voters. The program is the only one of its kind in the nation currently in effect.
Environmental Change in Progress
The cap-and-trade program incentivizes companies to reduce their greenhouse gas (GHG) emissions. The foundation for this legislation was Bill 32, signed by Schwarzenegger in 2006, and was fiercely opposed by oil companies and union workers at the time. This time around, both groups are in support of the legislation, largely due to Governor Brown’s signing of an even stricter version of Bill 32 last year.
The revised bill, SB 32, requires California to cut GHG emissions to 40% below 1990 levels by the year 2030. The original Bill 32 only required the state to reduce GHG emissions to 1990 levels by the year 2020. If Bill 32 had been allowed to expire in 2020, many companies would have been subjected to severe restrictions that could damage their bottom lines and California’s economy as a whole.
All Eyes on Us
California’s pro-environmental legislation has been scrutinized many times over. Opponents worry that these stringent laws will cause gas prices to skyrocket and the state’s economy to suffer. Supporters say that this is precisely why the cap-and-trade program was implemented; to offset the corporate costs of reducing GHG emissions with government-subsidized incentives. That said, some worry that the price of emission permits are still too low to incentivize enough companies to enter the program. It’s safe to say, however, that the rest of the nation will be watching our economy and environmental impact over the next decade to see what happens.