For once in California’s fight against climate change, lower greenhouse gas emissions aren’t cause for celebration. The recent drop in pollution as many factories sit idle is temporary, but it could hurt the state’s anti-global warming programs while it lasts.
Many of those green initiatives are funded through a cap-and-trade system and the sale of permits to businesses that pump heat-trapping gases into the atmosphere. Last year, California spent about $2 billion from the sales to continue building a high-speed rail system, buy electric school buses and prevent wildfires — all steps to chip away at emissions. Now emissions have decreased as the pandemic has closed offices, factories and schools. State revenue from selling permits in is in jeopardy.

“That money is going to come under increasing pressure,” said Chris Busch, research director for the consulting firm Energy Innovation. “It was always everybody’s favorite pot of money to pull from.”

Analysts expect that the next quarterly auction, on May 20, won’t sell out of all the current permits available. Dozens of programs in California could be affected, including electric vehicle rebates, subsidies to help low-income residents insulate their homes and other “things that have real impacts on people’s lives,” said Katelyn Roedner Sutter, manager of the U.S. climate program at the Environmental Defense Fund.

“I don’t think anything is completely safe,” she said.