Oh no, we’ve seen this movie before.
Gov. Jerry Brown anticipates the state will collect upwards of $1 billion during the coming fiscal year from the state’s greenhouse gas cap and trade energy revenues. The program is scheduled to unfold in the next few months.
At a time when the state faces a staggering $16 billion deficit, this revenue could be the sweetest financial news in years.
Or is it?
The cap and trade program sets targets for the state’s major energy users and pollution emitters.
Those companies that exceed their targets can buy permits for more energy use, a concept that is designed to discourage consumption while providing more revenues for the state from those that exceed their energy allowances.
The problem is that the legality of the program is anything but certain. Governor Brown may be counting on up to $1 billion next year, but several lawsuits question cap and trade on everything from violations of the Constitution’s interstate commerce clause to conflicts with existing state laws.
Given the current state of confusion, it’s more than a little risky to assume anything about if or when the program would take effect.
The assumptions regarding cap and trade revenues are the latest example of overly optimistic projections by California governors.