California diverts $500 million carbon revenues to state budget

June 13, 2013 by California Carbon

Climate Connect News, London: California Governor Jerry Brown has approved a proposal to divert $500 million from emission allowance revenue to the state budget. The Governor argues that temporarily borrowing carbon revenue would help the state propose better programs to reduce greenhouse gas emissions. Several environmental groups, however, have criticised the Governor’s decision.

This revenue has been raised from the auction of emission allowances under the state’s cap-and-trade scheme organised by the Air Resources Board. So far three auctions have been completed by the ARB which have yielded substantial revenue. The Board has auctioned around 70 million emission allowances of various vintages and has raised about $790 million.

Earlier this year, some legislators had proposed to set up a Greenhouse Gas Reduction Fund which may be put under the control of the California Green Infrastructure Bank. The bank will be funded by revenue from California Cap-and-trade auctions, as a special vehicle to offer financing to private businesses or local government bodies for emission abating projects by means of specified tax exemptions and bond issuance. The bank would be expected to report its activities for the preceding fiscal year, which includes a specification of bonds sold and the applicable interest rates and the amount of other public and private funds leveraged by the bank’s assistance, annually by 1 February.

States Tap Clean Energy, Carbon Revenue

California is not the only state which has used revenue from clean energy and emission reduction programs to plug budgetary holes. Recently, legislators in Connecticut tapped revenues from Clean Energy Finance and Investment Authority and the Regional Greenhouse Gas Initiative (RGGI). Revenue from sales of emission allowances under the RGGI program have also been increased.

Since the first auction of RGGI allowances in 2008, compliance entities from Connecticut have purchased over 34.5 million allowances for over $80 million. The ten states which were initially the part of RGGI have so far purchased over 179.5 million allowances yielding revenue of over $1.35 billion.

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