Californians are Set to Benefit from Cap-and-Trade Proceeds

Since California’s cap-and-trade program for greenhouse gases officially entered into force this year, many have focused on its cost to businesses – particularly energy companies and industry. Those firms now have to pay for each tonne of greenhouse gas they emit into the atmosphere, either by buying allowances for those emissions at state-run auctions or by buying the allowances from each other. While this is a cost for businesses, California consumers will actually start seeing some rewards – even in disadvantaged communities.

“Already next year power consumers in California will get ‘climate dividends’ - every household will see a share of the proceeds” said Brian Turner of the state’s Air Resources Board at yesterday’s Climate Leadership Conference in Washington D.C. Turner was referring to a portion of the cash paid for allowances at the auctions that the state actually sends back to households in the form of a check at the end of the year.

Admittedly, that portion is as yet quite small: the bulk of the proceeds (about $140 million in the last auction) goes toward lowering the bills for customers of investor-owned utilities (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric). There have been two auctions so far and California will hold a couple more this year – check out a detailed description of the last auction and who participated here.

The state’s portion of the proceeds (roughly $84 million in the last auction) is set to go toward further reducing emissions as determined by the state legislature – agencies’ latest detailed thoughts on the exact distribution suggest that at least 25% would go specifically toward projects benefiting disadvantaged communities. Those populations generally suffer disproportionately from carbon pricing because energy spending (on gas and electricity) accounts for a greater share of their income.

"This is a great direction for California to take the auction money," said Leonard Robinson, host of the radio show Going Green With EnviroBro on the sidelines of the conference. He pointed out that several non-governmental organizations and community groups advocate this use of the funds, including the California Black Chamber of Commerce.

Who the recipient communities are and how they get funding is under discussion right now: the California Department of Finance together with the Air Resources Board drafted an investment plan that is open for public comment until March 8^th. That plan will ultimately be voted on by the state legislature as part of the state budget for fiscal year 2013/2014 by June.

The draft shows that California’s EPA identifies disadvantaged communities by zip code on the basis of criteria including income, unemployment, level of homeownership, and rent burden. Check out details about the criteria including maps and exact locations. As it stands, the communities in question include 8 million people or about 20 percent of California’s population. The idea is to combine social benefits and climate change mitigation through projects like increasing insulation in public housing.

Stay tuned to find out what the California state legislature ends up deciding – money destined for disadvantaged communities can offer some opportunities for organizations carrying out green projects in those areas.

[image credit: Robert Huffstutter: Flickr cc]