The Works

Jerry Brown Wants to Spend California Cap-and-Trade Money on High-Speed Rail

According to the Sacramento Bee, the governor will propose allocating “several hundred million dollars” of this year’s cap-and-trade revenue on high-speed rail.

Credit: California High Speed Rail Authority

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With a pair of tough court rulings under its belt and a potentially worse one coming this year, the high-speed rail project between San Francisco and Los Angeles is in trouble. Late last year, a California judge ruled that the state cannot sell billions in bonds to pay for construction until the California High Speed Rail Authority rewrites its business plan and completes more environmental reviews. Federal funding is somewhat tenuous, given that it was predicated on the state matching money that no longer seems forthcoming. Early this year the same judge will rule on project opponents’ request to halt construction entirely.

Gov. Jerry Brown, though, appears committed to moving forward with the plan, and is expected to propose spending some money that the state will reap from its cap-and-trade carbon emissions trading program in 2014 on high-speed rail. The Sacramento Bee has the story:

Gov. Jerry Brown plans to propose spending millions of dollars in fees paid by carbon producers to aid the state’s controversial high-speed rail project.

The proposal — and the prospect of additional funding from the state’s cap-and-trade program in future years — could provide a significant lift to a $68 billion rail project beleaguered by uncertainty about long-term financing.

Brown plans to propose allocating several hundred million dollars this year, sources told The Sacramento Bee.

(Update: One Bee reporter puts Brown’s total high-speed rail ask at $250 million.)

Brown’s budget proposal isn’t due until Friday, but the state earned $1.4 billion from auctioning off pollution rights in 2013, and is expected to pull in a similar amount this year.

While Brown is widely expected to make the proposal, his idea will not come without controversy and pushback from environmentalists. In 2012, the state’s Legislative Analyst’s Office warned that using cap-and-trade revenues for high-speed rail “would not help achieve AB 32’s primary goal,” referring to the 2006 legislation that created the cap-and-trade greenhouse gas emissions trading program:

The primary goal of AB 32 is to reduce California’s GHG emissions statewide to 1990 levels by 2020. Under the revised draft business plan, [California high-speed rail’s initial operating segment from Merced to Bakersfield] would not be completed until 2021 and Phase 1 Blended [from San Jose to San Francisco] would not be completed until 2028. Thus, while the high–speed rail project could eventually help reduce emissions somewhat in the very long run, given the project’s timeline, it would not help achieve AB 32’s primary goal of reducing GHG emissions by 2020. As a result, there could be serious legal concerns regarding this potential use of cap–and–trade revenues.

The report’s authors also wrote that “[c]onsidering the cost of a high–speed rail system relative to other GHG reduction strategies (such as green building codes and energy efficiency standards), a thorough cost-benefit analysis of all possible strategies is likely to reveal that the state has a number of other more cost-effective options.”

Next City spoke with two environmental groups this morning who echoed the LAO’s reluctance to spend cap-and-trade money on high-speed rail.

“Inherent in AB 32 is that we need to act sooner rather than later,” said Kathryn Phillips, the Sierra Club’s California director. “The problem with taking that [cap-and-trade] money and applying it to high-speed rail is that we don’t anticipate that we’re going to get those benefits — reductions in greenhouse gas emissions — in the short-term. Given how urgent the problem is and has become, and how much we’re seeing the effects of climate change in this state, especially in water availability, it feels irresponsible to not apply that money to those programs that will get you greenhouse gas emissions reductions now.”

Bill Magavern, policy director at the Coalition for Clean Air, concurred. “We don’t think that high-speed rail should be getting a large proportion of the revenues,” he said, and suggested that “there are probably a number of legislators” who would agree with his group’s opposition to any sizable high-speed rail allocation.

Magevern and Phillips both cited other programs as more worthy of the cap-and-trade revenue due to their more immediate anticipated emissions reductions, with both mentioning electric vehicle subsidies as one area they expect to have more of an impact. Phillips also mentioned diesel emissions at the state’s ports and rail yards, as well as water efficiency measures. Magevern suggested weatherizing homes and operating assistance to local transit agencies across the state.

Don’t expect Brown to give up without a fight. With Congress increasingly reluctant to spend more money on the ailing high-speed rail project, he will need all the help he can get from state funding sources like cap-and-trade.

And the cap-and-trade money would just be the tip of the iceberg. According to one alternative funding plan put forward by Bay Area urbanist group SPUR, cap-and-trade would contribute a total of $13 billion toward the project, with another $9.4 billion coming from road tolls, $15.8 billion from a gas tax and $3.8 billion from vehicle license fees, all to offset federal grants and bonds that were written into the business plan but which may never arrive. (A recent LAO report pegged the total annual take from a proposed ballot measure that could eventually levy a 1 percent “property tax” on vehicles registered in California at between $3 billion and $4 billion .)

The Works is made possible with the support of the Surdna Foundation.

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Stephen J. Smith is a reporter based in New York. He has written about transportation, infrastructure and real estate for a variety of publications including New York Yimby, where he is currently an editor, Next City, City Lab and the New York Observer.

Tags: public transportationlos angelessan franciscocaliforniathe workshigh-speed railair qualityjerry brown

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