John Upton Dec 8 2016 Climate Central
…Golden State Democrats will be trying to use their supermajorities to extend an imperilled landmark climate program — called cap-and-trade — beyond 2020. Such an extension would almost certainly require two-thirds lawmaker approval in the state assembly and senate. That’s because lawmaking rules in California are different for taxes and fees than for other kinds of bills, which can be passed with simple majority votes.
…Although it’s just a few years old, California operates the world’s second biggest cap-and-trade program (the European Union’s is bigger). Permits that are needed to pollute the atmosphere with greenhouse gases are called allowances. They’re purchased by Californian power plants, oil refineries and factories and traded by financial speculators, raising hundreds of millions of dollars yearly for green projects while capping pollution.
Similar cap-and-trade programs are operated by China, South Korea, New Zealand, a coalition of East Coast states and elsewhere. Instead of operating cap-and-trade programs, British Columbia and some other governments impose taxes on greenhouse gas pollution.
…“An effective cap-and-trade program in California is more important than ever,” said Harvard economics professor Robert Stavins, who directs the Harvard Project on Climate Agreements. “It’s crucial that California increases its reliance on its cap-and-trade system, rather than relying on conventional regulatory approaches, which are much more costly.”
The new rules will make it more difficult for utilities and other polluters to stay under the state’s carbon cap, which could cause demand for dwindling supplies of pollution allowances available each year to spike. That may push Californian cap-and-trade prices to levels never seen anywhere in the world. If that risks causing an economic shock, the governor has the power to suspend cap-and-trade….