Governor Brown's Proposed Loan Has Environmentalists Seeing Red

May 24, 2013
By Jenesse Miller

California Governor Jerry Brown earned CLCV's endorsement when he ran for governor (again) in 2010, and he's earned decent scores on our annual California Environmental Scorecard since then. He's been a champion for California's pioneering climate change solutions; in fact, he spoke to a group of scientists this week, warning "it's over" in five years, unless we do more to reduce the carbon dioxide emissions that are cooking the planet. But lately, environmentalists are "seeing red" over Brown's proposal to borrow $500 million from the state's cap-and-trade revenues.

KQED has the story:

But while Brown is preaching action on climate change, his proposal to shift revenue from California’s cap-and-trade auctions has environmental groups seeing red.

California is the first state to try and limit greenhouse gas emissions through a cap-and-trade system. The state Air Resources Board has held three carbon allowance auctions so far, generating nearly $260 million in state revenue. By law, that money is supposed to go toward programs aimed at reducing greenhouse gases  and improving the air.  A portion of the revenue is also supposed to be funneled to poorer, heavily-polluted communities.

But the Brown Administration says the state needs more time to design and develop these efforts, so the governor’s revised budget proposes taking all the revenue and loaning it to the general fund, which pays for broader government spending. That would essentially delay any spending on the emission-lowering programs for at least another year.

A collective "NOOOOO!" could be heard from environment, social justice, public health and business groups in response. Dozens of environmental groups including CLCV signed on to a letter to the legislature that pointed out:

These are funds available now for “win-win” investments that stimulate economic activity and create jobs, while fighting climate pollution. The sooner we begin to invest in efforts to further reduce our emissions, the greater impact we will have on the climate crisis. California voters overwhelmingly support state climate action, and are expecting to see the investments and benefits from the cap and trade program. Delaying these investments undermines public confidence in state climate efforts... Please don’t delay investments in California climate solutions!

From the Los Angeles Times:

Lending that money would be “extraordinarily disappointing,” said Kathryn Phillips, director of Sierra Club California. “The governor will be delaying opportunities to use those funds to actually get critical reductions in global warming pollution,” she said.

And the San Jose Mercury News:

"The governor is right on the rhetoric, but he needs to put our money where his mouth is," said Bill Magavern, the Coalition for Clean Air's policy director. "That's money that needs to be invested in our communities to reduce pollution and create jobs."

And Bloomberg:

The Greenlining Institute, a Berkeley, California-based public policy group, described Brown’s proposal as a “a dangerous game that could wreck California’s push toward clean energy.”

“Seizing these funds for other uses will hurt our state’s neediest communities,” Ryan Young, legal counsel for the group, said by e-mail. “It’s simply not necessary.”

A piece in the Sacramento Bee by Holly Smithson, president and COO of CleanTECH San Diego, and Susan Frank, a CLCV Board member and Executive Vice President of the Better World Group, outlines why this move would be terrible from a economic standpoint, saying "the stakes are too high for such a drastic maneuver":

California's pioneering low- carbon laws have placed this state at the vanguard of the emerging global clean energy industry; attracting billions of dollars in private investment and creating jobs during the great recession. The state has generated exceptional momentum and a clear path forward to accelerate its progress by investing in clean technology innovations to further reduce greenhouse gas emissions, as explicitly set out in AB 32.

That's why diversion of these investments for more than a year isn't prudent. Most of all, such action sends the wrong message while casting a dangerous pall of uncertainty over the state's clean tech investment and businesses planning and operations...

We've witnessed from our eastern neighbors, the nine New England and mid-Atlantic states that make up the Regional Greenhouse Gas Initiative, that when states invest their permit proceeds promptly, they realize better and faster economic outcomes. Subsequently, these nine states are surging past California. An independent report on the Regional Greenhouse Gas Initiative's first three years, from 2009-12, found that these states reaped a total of $1.6 billion in economic growth, creating 16,000 jobs, and saving consumers $1.3 billion in energy costs, despite the economic downturn.

Many of those states made the strategic decision to shorten the time between collecting proceeds and disbursing them, positively benefiting their economies during a challenging financial period. California should follow suit, and ideally get back to leading the clean energy revolution and improving the air we breathe and the business opportunities we're generating. Retreat – even a short-term one, with interest – is a shortsighted option with long-term negative consequences.

Today a California Senate committee approved Governor Brown's loan. Stay tuned.



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