Brown threatens ‘intrusive’ climate rules if cap and trade fails

Gov. Jerry Brown on Thursday threatened to cut greenhouse gas emissions through “massive” new regulations if California legislators fail to extend the state’s cap-and-trade system for fighting global warming.

His heated comments, delivered to a state Senate committee hearing, served as an unsubtle nudge to Republicans and business-friendly Democrats who have reservations about cap and trade, which uses market mechanisms to slowly lower emissions.

The current system, which the governor often touts as a model for other states and countries, may lack legal authorization to continue past 2020 unless the Legislature extends it. A bill unveiled this week by Brown and legislative leaders would keep it running through 2030.

And with a vote on the bill scheduled for Monday, Brown told senators that the alternative to cap and trade could be worse.

If cap and trade dies, the state would switch to using direct “command and control” regulations, Brown said — an approach that could mean ordering specific cuts from specific industries on a set timetable. Cap and trade, by contrast, gives businesses flexibility in how and when they cut emissions and is generally considered to cost less. The system is one of several elements of California’s strategy to slash greenhouse gas emissions, which must fall by more than 40 percent by 2030, according to state law.

“We’re not going to pull back — the only question is how to go forward,” Brown told a crowded hearing of the Senate Environmental Quality Committee. “Are we going to do that by an extensive, massive, intrusive regulatory burden that will be three to five times more expensive? ... That is not the way to go.”

The bill, he said, represents “the most important vote of your life. ... Unless you think I’m lying. And I was in the seminary three years.”

His comments highlight the biggest point of contention in the bill, AB398.

California Gov. Jerry Brown testifies in support of Assembly Bill 398, one of two bills to extend the state’s cap and trade program, at a hearing of the Senate Environmental Quality Committee. California Gov. Jerry Brown testifies in support of Assembly Bill 398, one of two bills to extend the state’s cap and trade program, at a hearing of the Senate Environmental Quality Committee. Photo: Rich Pedroncelli, Associated Press Photo: Rich Pedroncelli, Associated Press Image 1 of / 1 Caption Close Brown threatens ‘intrusive’ climate rules if cap and trade fails 1 / 1 Back to Gallery

Hammered out during months of closed-door negotiations, the bill contains language that would bar state and local air regulators from imposing firm emission limits on industrial facilities already covered under cap and trade. The Bay Area Air Quality Management District had been poised to enact a rule limiting oil refinery emissions; it would have been the first local air district in the nation to do so.

“We object to legislation that attempts to strip away our authority, muddle jurisdictional lines and propose flawed control strategies,” said Jack Broadbent, executive officer of the Bay Area air district, in a statement.

Cap and trade works by setting an annual limit on the state’s greenhouse gas emissions and forcing companies to buy a permit, called an allowance, for every metric ton of heat-trapping gases they emit. The number of allowances available each year equals the cap, and both decrease over time, reducing emissions.

If companies have a hard time quickly cutting emissions, they can buy allowances from the state, or from each other.

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The bill faces opposition from both the right and left, with Republicans questioning its economic impact while environmental justice advocates call it too kind to the oil industry.

Brown described the bill as a balancing act and urged legislators not to let partisanship or reservations about specific elements of the bill’s language block its passage.

“If we look to Washington, the turmoil, the chaos, the bad feelings exist not just between the parties but inside the parties,” Brown told the committee hearing. “Let’s not be Washington. Let’s pull together and show that Republicans and Democrats can come together and respond to an existential threat.”

Sen. Jeff Stone, a Republican representing Riverside County, countered that his party had been left out of the months of closed-door negotiations that produced the bill. Stone and fellow Sen. Ted Gaines, R-El Dorado Hills, voted against it.

“You excluded Republicans until the last minute, when you needed a few of our votes,” Stone told the governor.

After hours of discussion, the committee approved the bill on a 5-2 vote along party lines and sent it to the appropriations committee. A vote of the full Senate is expected Monday.

The California Chamber of Commerce, a powerful business group, challenged the cap-and-trade system in court as an illegal tax not long after the system launched in 2012. The California Supreme Court recently declined to hear that lawsuit, leaving in place a lower court ruling that rejected the tax argument. Still, Brown wants the bill to pass with the support of two-thirds of legislators — the level required for a new tax — as insurance against any future challenges.

The California Legislative Analyst’s Office has warned that the system may not have the legal authority to continue past 2020 unless the Legislature extends it. A 2006 landmark California global warning law authorized the cap-and-trade system to run through 2020, but uncertainty has simmered as to whether the law authorized it to continue past that date.

Since the bill was unveiled Monday, along with a companion bill to monitor and cut industrial air pollution, unusual coalitions have lined up on both sides.

Supporters include such environmental groups as the Natural Resources Defense Council and the Environmental Defense Fund, as well as the California Chamber of Commerce — the organization that sued to upend cap and trade.

Opponents, meanwhile, include the Sierra Club — which believes the bill is too generous to oil companies — and, so far, the Senate Republican caucus.

“Unfortunately, many of the mechanisms the state’s regulatory agencies have used to reduce carbon emissions have increased costs for consumers and for employers,” read a letter that 11 of the Senate’s 13 Republican members sent to Brown this week. “We are concerned that this rushed effort to enact a cap-and-trade extension will be no different.”

David R. Baker is a San Francisco Chronicle staff writer. Email: dbaker@sfchronicle.com Twitter: @DavidBakerSF