Walters: Cap and trade is now a backdoor tax on California consumers

"The plan, dubbed cap and trade, authorizes the California Air Resources Board to conduct quarterly auctions of emissions allowances which refineries, electric power generators and other industrial facilities purchase to offset their emissions. It's an alternative to actually reducing emissions or financing other projects to cut them. Once purchased, the allowances can be sold and traded back and forth. As the auction prices increase over time, emitting facilities would, in theory, be motivated to make reductions."

"Legislators balked at a simple extension and, instead, insisted on making some changes that tightened the number of emission allowances and gave lawmakers more authority over spending the revenues. The program gained a new name, cap-and-invest, which implies that, as the auction proceeds have reached multi-billion-dollar levels, politicians' chief focus for how the money is spent has changed from emissions reduction."

Nineteen years ago during Arnold Schwarzenegger's governorship, California created a cap-and-trade program authorizing the Air Resources Board to auction emissions allowances quarterly to refineries, power generators and industrial facilities. Allowances can be bought, sold and traded so purchasers offset emissions instead of directly reducing them. Auction proceeds have grown to about $5 billion annually and have funded nearly $33 billion in investments statewide, with officials crediting substantial emissions reductions. The program is scheduled to expire in 2030 and Governor Gavin Newsom sought an extension to 2045. The Legislature tightened allowance limits, increased legislative control over spending and rebranded the program cap-and-invest. The Legislative Analyst's Office warns funds can legally be treated like tax revenues available for any purpose.

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