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CARB Approves $500 Million Plan; Actual Spending Remains in Doubt

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July 5, 2016

The California Air Resources Board approved a spending plan for $500 million in cap-and-trade auction funds at its June 23 meeting—including $23 million for clean trucks—but not a dime is going out the door until the Legislature and governor agree on a bill that appropriates the money.

Gov. Jerry Brown’s budget allocated $500 million to accelerate the transition to low-carbon vehicles, but the Legislature passed a state budget earlier last month that put aside cap-and-trade allocations and several other issues to be resolved in trailer bills. That kick of the can left several clean transportation funding bills to die in appropriations and budget committees, including the Coalition’s priority, AB 2415 (Garcia), the California Clean Truck, Bus, and Off-Road Vehicle and Equipment Technology Program. AB 1555 and a suite of bills by Sen. Fran Pavley also got derailed (see Bill Tracker for details).

All or nothing—or something in between

Lawmakers could allocate just a fraction of the money for CARB’s plan—or nothing. One reason for their spending hesitation may be the stunning shortfall in the last quarterly auction of cap-and-trade carbon credits, which netted only $10 million, instead of the $600 million the state had projected. Yet the Greenhouse Gas Reduction Fund, which is fed by cap-and-trade money, is flush with $1.4 billion, and Brown and lawmakers could not agree on spending it last year even with auction proceeds rolling in.

The funding allocation most likely is stuck in a limbo created by the cap-and-trade program’s uncertain future, as the Los Angeles Times and others have reported. The governor is negotiating with legislative leaders on a way to extend AB 32—which enabled the cap-and-trade program as well as the Low Carbon Fuel Standard—past 2020, when it is set to expire. GGRF disbursements are likely part of those negotiations.

“If the Legislature only appropriates a fraction of the $500 million, the ARB is going to have to go back and prioritize cuts,” noted Coalition President Thomas Lawson. “We appreciate the $23 million allotted for clean trucks—although we think the real need is $100 million—and we’re prepared to fight to make sure it stays in the plan. We are also continuing to advocate for a ranged incentive of $18,000 to $25,000 for engines that meet the low-NOx standard, rather than a flat $18,000, and several ARB members seem receptive to that.”

Volkswagen settlement brings new funding

Lawson added that there will soon be another source of funding in play, so clean transportation advocates won’t have to rely solely on the GGRF. On June 28, CARB Chair Mary Nichols and Attorney General Kamala Harris announced that Volkswagen AG has agreed to pay California more than a billion dollars to mitigate illegal emissions caused by cheating devices on 71,000 2.0-liter diesel cars sold in the state between 2009 and 2015.

Over the next several years, California will receive $380 million to fund incentives for clean heavy-duty vehicles and equipment in disadvantaged communities, and $800 million to advance California’s zero-emission vehicle programs.

“We certainly think it’s appropriate to put some of that money toward natural gas trucks,” Lawson said.


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