Bloomberg News

California Overstates Fiscal Relief From Carbon Fees, Study Says

February 20, 2012

Feb. 16 (Bloomberg) -- California will be able to use only $100 million of the estimated $1 billion in proceeds from auctioning carbon allowances to balance its budget, not the $500 million projected by Governor Jerry Brown, the state legislative analyst said.

Brown’s plan “likely overestimates the magnitude of potential general fund relief,” said a report from the Legislative Analyst’s Office, a nonpartisan agency that advises lawmakers.

Brown is anticipating $1 billion from the nation’s first economy-wide program for auctioning carbon allowances to polluters. Half of that may be applied toward programs paid out of the general fund, which supports education, health care and some bond payments, among other things. The analyst’s office said it identified only $100 million worth of qualifying programs.

The cap-and-trade regulation lets polluters use credits from certified carbon-reducing projects, such as urban forestry, to “offset” as much as 8 percent of their emissions. Proceeds from auctioning allowances must, under the law establishing the program, be applied toward programs that reduce greenhouse-gas emissions.

Brown has said he expects some money may be used for California’s proposed high-speed rail project linking San Francisco with Los Angeles and San Diego. The analyst did not comment on that plan.

--Editors: Stephen Merelman, Pete Young

To contact the reporters on this story: James Nash in Sacramento at jnash24@bloomberg.net; and Lynn Doan in San Francisco at ldoan6@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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