Diana Madson
Diana Madson
Government Affairs Director

How it's Looking for Our Region: An Update on State of Cap and Trade Funding in the Sierra

Today, Sierra CAMP published an updated State of Cap and Trade Funding in the Sierra fact sheet to reflect 2016 funding. Many of the agencies administering funds from the GGRF for the 2016-2017 distribute on two-year cycles. Our report looks at the first half of that cycle, the 2016 awarded grants, and as such 2017 funds are not reflected. However, our fact sheet provides insight into the funding trajectory, showing that not much has changed since the 2014-2015 cycle; Sierra communities are still underfunded compared to other regions.

CAMP GGRF ProjectMaps 2017

Revenue generated from sales of cap-and-trade emissions permits is restricted to achieving GHG emission reductions and dedicated to the Greenhouse Gas Reduction Fund (GGRF). While GGRF funding to the Sierra Nevada is currently limited, without it Sierra communities lose critical access to potential funding for carbon sequestration and forest restoration with multiple co-benefits for the surrounding communities. Moreover, at least 25% of the GGRF is dedicated to disadvantaged communities; this is critical for Sierra communities because low-income rural areas face even greater challenges adapting to climate change impacts – especially wildfire and flooding – due to economic disadvantage, marginalization, isolation, and other factors.

Auction proceeds help fund projects across California to help reduce greenhouse gas emissions in areas including Sustainable Communities & Clean Transit, Energy Efficiency & Clean Energy, and Natural Resources & Waste Diversion. In 2014 and 2015, these funds successfully provided over $870 million in projects. These funds were administered by 12 different state agencies through the GGRF. Eight of these agencies reported allocating nearly $530 million of that money in competitive grants and awards. Some of this funding benefitted the Sierra Nevada region by providing financing for forest and meadow restoration, and $8 million was allocated towards improving the Truckee Railyard Downtown Corridor. In all, thirteen counties in the Sierra Nevada region received $21,304,207 for 42 projects between 2014 and 2015. Despite these projects, the Sierra Nevada region received little funding compared to the rest of the state, enjoying just 1.98% of competitively awarded grants.

So how do things look in the 2016-2017 GGRF cycle? Well first, many GGRF programs are still in the process of awarding funds for the 2016-2017 cycle. That said, of the nearly billion in spending awarded in 2016, the Sierra Nevada region received funding for only 21 projects totaling $19,836,058 -- that’s just 2.05% going to the Sierra, only a 0.07% increase. Funding for the 21 projects came from the Low Carbon Transit Operations program, the Affordable Housing & Sustainable Communities program, and the Sustainable Agricultural Lands Conservation program.

Unfortunately, funding availability has been unreliable due to general uncertainty about the cap-and-trade system’s continuation; this is mainly related to questions about the system’s legality and whether it will continue after 2020. This uncertainty translates to fewer entities buying emissions permits, which in turn results in greatly reduced revenue for the GGRF. However, a California appeals court recently affirmed that cap-and trade is a legal system under California law, which significantly increases the likelihood that the system will be reauthorized. The fate of cap-and-trade will be decided by the California legislature this summer.

The functionality of the cap-and-trade system ultimately determines how much funding is available, so it is imperative that it be reauthorized in the legislature to reestablish certainty in the trading market. Through the combined efforts of SBC’s Government Affairs Program, Sierra CAMP, and others, we hope to capitalize upon the recent court decision and work to ensure the continuation of cap-and-trade funding for years to come.