LOS ANGELES - California Gov. Jerry Brown and legislative leaders have rolled out legislation to extend the state's cap and trade program to reduce greenhouse gas emissions, a program that generates billions of dollars for infrastructure spending.

California first passed cap and trade legislation more than a decade ago in an effort to lower greenhouse gas emissions to 1990 levels by 2020.

The new legislation aims to cut them to 40% below 1990 levels by 2030. The system works by placing a cap on emissions from companies responsible for the majority of the state's greenhouse gas emissions. The companies are permitted to sell or trade the unused portion of their allowances to other companies that are struggling to comply. The state sells permits to release greenhouse gases. Money from the permits funds infrastructure, including transportation projects that include its high-speed rail initiative.

California Governor Jerry Brown.
"The legislature is taking action to curb climate change," said California Gov. Jerry Brown. Bloomberg News

"The legislature is taking action to curb climate change and protect vulnerable communities from industrial poisons," said Brown.

Legislative leaders also pushed the new legislation, which is represented by Assembly Bills 617 398.

"These measures represent California's leadership on climate and air quality," said Senate President pro Tempore Kevin de León. “Extending California's cap and trade program will protect consumers and businesses alike from high energy costs, while reducing the greenhouse gasses and air pollutants choking our communities throughout the state."

"Once again we are showing that in California, protecting the environment and improving public health are inextricably linked," said Assembly Speaker Anthony Rendon. “With its strong air quality provisions, this agreement ensures that Californians in underserved communities--and communities most impacted by air pollution--will receive the greatest benefit. All communities deserve clean air, benefits from strong climate actions, and a strong green economy. This package does just that.”

Cap and trade has its share of opponents, and has been challenged in court as an illegal tax, but the courts have thus far upheld its legality.

Brown and other state leaders have been vocal that they will continue to push for environmental protection measures in the wake of President Trump’s decision earlier this year to withdraw from the Paris climate accord that was aimed at reducing greenhouse gas emissions.

But while a number of business groups support the new California legislation, some environmentalists immediately seized on some of its provisions as too weak. The bill prevents local air quality boards from imposing additional emissions quotas, for example.

There is also likely to be strong push back from Republicans. Sen. John Moorlach, an Orange County Republican, posted to his website that he felt Brown was rushing the bills to a vote as soon as this week and that the votes could go along party lines. Democrats can pass legislation without Republican support due to owning a legislative supermajority.

The two bills have both been amended and are awaiting committee action in the Senate.

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Kyle Glazier

Kyle Glazier

Kyle Glazier is a reporter covering market trends, infrastructure, and the Far West region for The Bond Buyer.