January 21, 2016 - In this report, we describe and assess the relationship—from both a legal and policy perspective—between the cap–and–trade regulation and the auction revenues that are generated as a result of the program.
February 24, 2014 - In order to minimize the negative economic impact of cap-and-trade, it is important that auction revenues be invested in a way that maximizes GHG emission reductions for a given level of spending. In reviewing the Governor's proposed expenditure plan, we find that there is significant uncertainty regarding the degree to which each investment proposed for funding will achieve GHG reductions. This uncertainty is the result of several factors, including there being only limited data and analysis provided by the administration, as well as the fact that the level of emission reductions achieved would depend on the specific projects funded by departments. Given these concerns, we recommend that the Legislature direct ARB to develop metrics for departments to use in order to prospectively evaluate the potential GHG emission benefits of proposed projects, as well as direct the board to establish a set of guidelines for how departments should incorporate these metrics into their decision making processes.
December 19, 2012 - California currently maintains over a dozen major programs that are intended to support the development of energy efficiency and alternative energy in the state. Over the past 10 to 15 years, the state has spent a combined total of roughly $15 billion on such efforts. In response to the Supplemental Report of the 2012-13 Budget Package, this report provides an overview of these different programs, as well as a preliminary assessment of them in terms of priority, overlap, and redundancy. We find that the state currently lacks a comprehensive framework that fully coordinates the state's energy incentive programs to help ensure that the state’s goals are being achieved in the most cost-effective manner. The absence of such a comprehensive framework (1) results in some level of program duplication, (2) results in some departments making policy choices that may not be aligned to legislative priorities, and (3) makes it difficult to compare effectiveness across programs. As a result, we recommend that the Legislature develop a comprehensive strategy for meeting the state’s energy efficiency and alternative energy objectives. In general, the comprehensive strategy should specify: (1) the state’s energy efficiency and alternative energy goals, (2) how programs should fit together to achieve the state’s goals, and (3) how program effectiveness will be measured.
February 18, 2016 - Presented to Senate Committee on Budget and Fiscal Review
April 15, 2016 - In March, the administration released its annual report on cap-and-trade spending outcomes. In this post, we summarize the information included in the report and, based on our review of the information, identify issues for legislative consideration.
February 23, 2006 - The budget proposes $7.2 million across several departments to implement the first steps in the Governor’s Climate Change Initiative—a series of strategies designed to reduce the state’s emissions of greenhouse gases (GHG). We recommend that the Legislature provide statutory direction for a state climate change policy that addresses a number of issues, including GHG emission reduction targets, the appropriate mix of regulatory and voluntary strategies, and lead agency designation.
May 10, 2017 - Presented to: Senate Environmental Quality Committee
April 14, 2010 - The state's major climate change legislation—commonly referred to as "AB 32"—is approaching a crossroads in its implementation. The state's AB 32 activities, currently carried out mainly by the Air Resources Board (ARB) but also by eleven other state agencies, will be shifting from the development of plans and regulations to program implementation and enforcement. Legislative oversight of the overall size and components of the AB 32 program budget is very important, particularly given this upcoming shift in the program's focus. In this budget-focused brief, we provide details of the Governor's AB 32 budget proposal and ARB's plan to pay for most of the AB 32 program administrative activities from a new fee. We also offer recommendations to ensure that (1) sufficient resources are devoted to economic analysis of AB 32 measures and (2) future AB 32 expenditures and fees are justified and set at appropriate levels.
February 9, 2012 - This report analyzes the design of the cap-and-trade program as adopted by the California Air Resources Board (ARB). This new, complex program is part of the state's plan to reduce greenhouse gas emissions statewide to 1990 levels by 2020—a goal set by the Global Warming Solutions Act of 2006 (commonly referred to as AB 32). The report examines in detail the specific policy choices made by the ARB in the design of the program, some specific policy trade-offs inherent in those decisions, and options for program design changes that the Legislature may wish to make depending on its policy priorities.
September 22, 2015 - We discuss (1) the purpose of the administration's triennial cap-and-trade Investment Plan, (2) limitations of the administration's recently released Investment Plan concept paper, and (3) several key questions we believe the administration should consider as it further develops the Investment Plan that could result in better information about the potential benefits, tradeoffs, and risks associated with different funding choices.
February 13, 2017 - In this report, we provide comments and recommendations related to the Governor’s proposal. We recommend the Legislature authorize cap-and-trade (or a carbon tax) beyond 2020. If the Legislature approves cap-and-trade, we recommend the Legislature strengthen the allowance price ceiling and provide clearer direction to ARB regarding the criteria that the board should use to determine whether a complementary policy should be adopted. We also recommend the Legislature approve cap-and-trade (or carbon tax) with a two-thirds vote because it would provide greater legal certainty and ensure ARB has the ability to design an effective program. With a two-thirds vote, we recommend the Legislature broaden the allowable uses of auction revenue because it would give the Legislature flexibility to use the funds on its highest priorities. When finalizing its 2017-18 cap-and-trade spending plan, we recommend the Legislature (1) reject the administration’s proposed language making spending contingent on future legislation, (2) consider alternative strategies for dealing with revenue uncertainty, and (3) allocate funds to specific programs rather than providing DOF that authority.
February 3, 2016 - Presented to Senate Committee on Environmental Quality and Select Committee on Climate Change and AB 32 Implementation