Senate Bill 775 (SB775)

On May 1st, 2017 California Senators Bob Wieckowski and Kevin De León announced a new bill (SB775) on carbon pricing in California that CalFACT is supporting.

CalFACT Talking points on SB775

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What we like about the bill:

  • A steadily rising price – the bill would modify California’s cap and trade system to have a steadily rising price starting in 2021 which would allow consumers, businesses, and investors the predictability they need to accelerate the shift to a clean energy future in California.
  • Protecting low and middle income households – the bill includes returning some revenue from the program directly to households, which will protect households from the effects of price increases while still motivating emissions reductions. This can allow the price to rise to the level necessary to reach our climate goals, while protecting families and communities, stimulating our economy, and encouraging ongoing public support for the state’s climate programs.
  • Simplicity – the bill would eliminate offsets and allocation of free allowances as well as minimizing banking of allowances from year to year.
  • Improved air quality in disadvantaged and fenceline communities – the elimination of offsets and free allowances should motivate greater emissions reductions at all sites state wide and reduce the chances of toxic “hotspots” in low income neighborhoods.
  • Wider coverage of emissions – With no free allowances and 100% of the emission allowances auctioned, a greater part of the economy would be covered by the carbon price.
  • Protecting the California economy and jobs – the bill provides for a border adjustment to provide a level playing field between California and states and countries without a similar carbon price, thus discouraging the movement of emissions (and jobs) outside of California.
  • Greater emissions reductions – with the price rising steadily to a level higher than under existing statute we can expect a greater reduction in emissions from the carbon price.

Questions we have

  • Funding for existing and additional climate programs – will this bill provide funding for programs currently funded by cap and trade through the Greenhouse Gas Reduction Fund? How much additional funding will it provide for climate related programs?
  • Support from the Environmental Justice community – will this bill work for the environmental justice community and gain their support? How will it relate to other bills in process such as AB378?
  • Will the border adjustment survive legal challenges? – a state level border adjustment is a new innovation in state carbon pricing and we look forward to seeing the details of how this can be implemented within the bounds of the commerce clause.

More info

The bill will leave the existing cap and trade system in place through 2020, and then modify it beyond that to have a steadily rising floor price for emissions allowances starting at $20 in 2021 and increasing $5/year starting in 2022 plus inflation.It will also have a steadily rising price ceiling starting at $30/year in 2021 and rising at $10/year plus inflation. The program will set an steadily declining annual limit of emissions and auction those allowances at a price between the floor and ceiling price (with no free allocation of allowances). If the prices rises to the ceiling, an unlimited number of additional allowances will be offered at that price.

Endorsements and Support

News Coverage