Prop 23 Update: Brown Seeks $500 Million AB-32 Cap-and-Trade Fees for Budget.

Russ Steele

During the Prop 23 debate, it was my position that AB-32 was not about saving the environment it was about suck more money from your wallet into political slush funds that  the government could use.

Bloomberg has the story:

Governor Jerry Brown plans to use half of the revenue from the nation’s first state- run cap-and-trade air-pollution program to help ease a $9.2 billion deficit in the most populous U.S. state.

Brown estimates the state will take in about $1 billion in the year beginning July 1 under the landmark legislation, which allows industry to buy and sell carbon credits to reduce greenhouse gases. The 73-year-old Democrat wants to use about $500 million on environmental programs now financed through the general fund, said H.D. Palmer, a Finance Department spokesman.

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Emission reductions will be enforced by decreasing the number of allowances over time. Allocations will start at 90 percent of industries’ recent levels and gradually shrink, from a peak of 394.5 million tons in 2015 to 334.2 million in 2020.

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Large industrial sources such as power plants and oil refineries must hold a permit for every ton of carbon they release beginning Jan. 1, 2013. Transportation-fuel distributors will follow in 2015.

Once the state knows how much the auctions will generate, Brown will submit a plan on how he wants to spend the money to the Legislature for approval. Democrats control both the Senate and Assembly. In his budget, Brown said he will use the money on clean energy, as well as environmental and natural-resource protection programs, and alternative-energy infrastructure.

When the Chicago Climate Exchange closed  2010 you could buy a ton of carbon allowances for less than a 5 cents. CARB was looking to price carbon allowances arround $35 a ton.  In September of this year, the futures on California Carbon allowances opened at $23.50 a metric ton. Yesterday these futures had fallen $13 a metric ton. EU credits are selling for $9.58 a ton, down from $17 dollars earlier this year.

The price of carbon allowance around the world continues to fall. Why? Because no one is buying carbon allowances.  Why? They are worthless.  Ignoring what is going on in Chicago and EU Brown is planning on saving his budget with worthless carbon credits. I wonder how well that is going to work out?