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We handle cases across the United States. Allen Stewart is licensed to practice law in Texas, California, New York, Pennsylvania, Missouri, North Carolina, Ohio and Arizona.

New Bill Directs California Cap-and-Trade Funds

Legislation Directs $1.5B to Cleaner Cars, Air Quality

Recent California legislative action will have profound effects on how America’s most populous state will reduce emissions and move on from fossil fuel-powered vehicles.

The Los Angeles Times wrote the state legislature sent Gov. Jerry Brown a bill outlining how to spend $1.5 billion in proceeds from the state’s cap-and-trade auctions, including $140 million to help consumers buy electric vehicles.

California’s “cap-and-trade” system requires companies who exceed certain levels of greenhouse gas emissions to buy emissions allowances from the state. Allowances can be traded and banked, and 4% of all allowances are held in reserve to contain costs. The money companies spend on allowances is then funneled into other environmental programs.

The single largest outlay of cap-and-trade revenues is $895 million for new, cleaner vehicles. That money would flow into various programs, including the aforementioned electric car rebate program as well as $140 million for the state’s seaports and $85 million for cleaner farm vehicles.

Chris Megerian of the LA Times noted that Brown initially wanted $300 million to help local regulators improve air quality in polluted neighborhoods. That element was later reworked so money goes to a clean vehicle program supporters hope will bring faster tangible results for those communities.

Other outlays for cap-and-trade funds include $225 million for forest management, $18 million for weatherizing low-income homes, $46 million for urban forestry and greening, and $15 million for restoring wetlands.

However, one provision in the bill rankled car manufacturers, especially electric car company Tesla.

The bill requires the state air board and labor department develop a system “to certify that companies included in the rebate program are fair and responsible in the treatment of their workers.”

The Davis Enterprise reported the requirement was added to the bill “at the behest of labor interests” who support unionizing workers at Tesla’s Fremont plant.

Not qualifying for rebates would hurt Tesla harder than other car manufacturers, said journalist Julie Cart, because Tesla’s cars are some of the most expensive on the market.

“This provision creates an unpredictable standard that would be impossible to adhere to while creating uncertainty in an already challenging market,” the Association of Global Automakers wrote in a letter to Gov. Brown.

Cart said the rebate program, which provides $2,500 to buyers of small electric cars, are vital to California’s goal of getting 1.5 million electric cars on state roads by 2025. There are currently only 323,000 clean vehicles in California.

Support for California’s electric vehicle infrastructure came from an unlikely source: the Volkswagen settlement.

Volkswagen (VW) recently paid California more than $1 billion to settle legal issues after they were caught installing emissions test defeating devices in 11 million VW vehicles; $800 million of that money landed in the state air board’s clean vehicle program.

“That money,” Cart said, “will be used to expand the state’s network of public charging stations.”

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