COVID-19’s public health threat is clear. In just four months, over 104,000 Americans have died during the pandemic. The virus’s death toll already exceeds the United States’ combined military fatalities during the Korean, Vietnam, Gulf, Afghan, and Iraq Wars – a period that stretches roughly 40 years.
These numbers are sobering and tragic, but COVID-19’s consequences go further. In addition to the virus, we are also facing a severe economic recession. Unemployment is at Great Depression-levels, consumer spending and economic activity is down, and government coffers are drying up.
COVID-19 indirectly threatens clean transportation. Yet, despite the difficulty ahead all is not lost – California has an opportunity to transform both our economy and transportation system.
First, the bad news for clean transportation…
To be blunt, California’s funds for clean transportation are likely to be wiped out by the recession. Even before the COVID-19 crisis, California expected less revenues from its cap-and-trade program. The Governor’s January Budget proposal projected a cap-and-trade expenditure plan of only $965 million, down from the $1.4 billion plan in the 2019-2020 Budget. For a refresher on how California’s cap-and-trade program works and funds climate investments, read here.
The COVID-19 crisis and economic recession have worsened this problem by reducing economic activity. People are driving less and buying fewer things. Businesses and industries are producing fewer products and services, if any at all. All of this lowers the demand for emission allowances, meaning less funding for clean transportation. Revenues from California’s most recent cap-and-trade auction fell from $600 million last fiscal quarter to just $25 million this quarter.
Further complicating matters, California anticipates a $54 billion budget shortfall. Though California’s “Rainy Day” reserve fund will cover some of the shortfall, balancing the budget will still be difficult. The State Legislature may even take money from the special fund for climate programs to help balance the budget. While the State Constitution does provide some protections for special funds, nothing can be taken for granted.
What’s the good news?
Though the state’s fiscal situation is certainly bad, please keep in mind:
- The May auction includes just one fiscal quarter. As the economy improves, cap-and-trade revenues will increase.
- The intent of the cap-and-trade program is to reduce emissions, not raise revenues. Since California is producing fewer emissions, there is less demand for allowances.
- California remains committed to both its emissions market and the climate investments program, including clean transportation.
- The Coalition for Clean Air and our partners successfully championed a law which will require benefits to disadvantaged communities. California must spend at least 25% of its climate investment dollars in disadvantaged communities; another 10% is required to be spent in low-income communities.
Additionally, the Newsom Administration has identified its funding priorities. One of those priorities is AB 617, a 2017 law which requires emissions reductions in the state’s most polluted communities. Front line communities, such as Wilmington, East Los Angeles and the Coachella Valley need cleaner air. Transportation is the key source of emissions in those communities.
Further, the crisis provides California and the nation a unique economic opportunity. Investing in clean technologies and building infrastructure will create jobs and help get communities back to work. During the Great Recession of 2008-2010, both the state and federal government invested billions of dollars in the clean economy. This created hundreds of thousands of jobs, deployed renewable energy (as well as reduced its cost) and bolstered manufacturing. While the federal government is heading down a wrongheaded path, California remains a climate leader. Similarly, the private sector recognizes the future lies with the clean economy.
Stand up for clean transportation!
Though California faces tough choices ahead, your elected officials need to hear from you! While the State Budget needs to be passed by June 15th, decisions on California’s climate investment programs are being deferred to August. California must protect clean transportation funding to get dirty diesel trucks off the road and get people into clean cars. Contact your state legislators and ask them to protect California’s clean transportation investments, our health, and our climate.
