There might be more money in the first year of California’s cap-and-trade program than expected. Governor Brown’s 2012-2013 budget includes $1 billion in revenue from the state’s cap-and-trade program, ramping up this year as part of California’s 2006 climate legislation, known as AB 32. That might seem surprising since 90% of initial permits to emit greenhouse gases will be given away to industry. But number-crunchers at the Legislative Analyst’s Office (LAO) says that selling just ten percent of allowances at auction could generate that much cash. The price for an emission allowance has not been set, but projections range from $10-$40 per credit, which means that the state might garner even more than $1 billion in the bargain. While more money couldn’t hurt a cash-strapped state like California, there are still some concerns about how this new revenue will be spent. Tiffany Roberts, Senior Fiscal and Policy Analyst for Energy and Climate Change at the LAO, explained to me that there are legal restrictions on how revenues from cap and trade can be used. “These revenues can’t go to fund general tax purposes,” Roberts said. “They have to be used either to mitigate greenhouse gas emissions or to mitigate the adverse effects of greenhouse gas emissions.”
