Cap-and-Trade Auction Investment Plan a Win for California

by | May 8, 2013

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California’s clean economy is dominated by industries like clean transportation, energy generation, and energy efficiency. So it comes as no surprise these areas were targeted for cap-and-trade auction proceeds investments in the draft investment plan released by the California Air Resources Board (CARB) recently.

Specifically, the plan lays out three major categories for investing auction proceeds: 1) Sustainable Communities and Clean Transportation 2) Energy Efficiency and Clean Energy, and 3) Natural Resources and Waste Diversion. Transportation and energy represent the two largest sources of GHG emissions in California, while natural resources and waste represents a huge untapped potential for reductions that will also create multiple benefits.

What are the facts though?  Why are we so sure that these are the right investments that will create a winning formula for California?

1.         It has worked before. A similar investment strategy in New England turned $912 million of proceeds from selling carbon allowances to the electricity sector into $1.6 billion in benefits which included reduced electricity bills and job creation.

2.         It targets our disadvantaged communities. There is clear data indicating  these communities are the most vulnerable to severe pollution and environmental harm and existing law requires at least 25% of auction proceeds benefit these communities. This investment plan lays out ways to exceed that target so that they can expect to disproportionately benefit from California’s plan.

EDF’s Invest to Grow Report showed that

3.         Investing in the state’s clean economy is investing in job growth. In California, it has added jobs up to 178% faster than traditional economic sectors over the past 15 years, meaning that we can expect investing auction proceeds in the clean economy will continue to spur job growth for years to come.


4.         California’s clean economy has proven more resilient during economic downturns than traditional economic sectors. While overall state unemployment fell seven percent during the recent recession, clean economy sectors remained stable. This means investing in the clean economy is a safe strategy for long term prosperity.   For example, the following graph shows that during economic downturns in 2002 and 2010, the green economic sectors either grew or remained stable while the rest of the economic retracted.


Investing in clean transportation makes sense because it …

5.         Will improve our health. California suffers from some of the dirtiest air in the nation. Forty percent of California’s GHG pollution comes from the transportation sector (cars, trucks, trains, etc.). Traffic pollution from cars also costs California nearly $15 billion in health damages annually. A recent report by the American Lung Association in California confirmed that in 2012, California was home to 11 of the nation’s 25 most polluted cities – so these investments are needed both now and in the future.

6.         Will create jobs. Every $1 billion invested in public transportation creates approximately 24,000 jobs in California – where the state unemployment rate is still about the national average.

Investing in clean energy and energy efficiency makes sense because it …

7.         Has already proven to be a game-changer for California. Energy efficiency projects have saved Californians over $66 billion in the last 35 years. and lowered energy use 25% below 2008 standards.

8.         Benefits recipients from cities and counties to businesses. An EDF’s Climate Corp program demonstrated that cities in North Carolina could save between $534,000 and $2,192,000 over a five year period.  Department of Energy assessments found that on average industry could reduce its electricity bills by 17% with energy efficiency projects that would pay for themselves in 1-2 years.  

Investing in natural resources makes sense because it …

9.         Helps farmers and the planet. Fertilizers commonly used in agriculture have a heavy GHG impact so reducing their use can generate big GHG savings; it can also save farmers money while reducing the release of harmful air and water pollutants.

10.      Protects open space and agricultural land. Together they can reduce vehicle miles traveled by preventing urban sprawl.  Estimates show that protecting 25 square miles of agricultural land would save an amount of energy that is sufficient to power 48,000 homes and would create health saving of $38.7 million by reducing air pollution.

Erica Morehouse is a staff attorney with the Environmental Defense Fund. Erica has been with EDF since 2009 focusing on transportation and the policy and legal aspects of implementing California’s landmark Global Warming Solutions Act of 2006 (AB 32).

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