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Cap-and-trade vote gives new life to California high-speed rail
dennis Wyatt web
Dennis Wyatt

California high-speed rail will not die.

By extending the cap-and-trade July17 by a decade until 2030, the Legislature essentially assured that the high-speed rail project will not collapse. That's because the only source of steady money for high-speed rail construction is from the auction of credits in the greenhouse bartering system of trading money for the ability to pollute. If that went away in 2020, the odds of the high-speed rail effort being derailed were greater than Michael Phelps losing a much ballyhooed race against a Great White Shark during Shark Week on the Discovery Channel.

What state and federal funds the project snagged was rapidly being depleted. The stampede of private sector investors that supporters in the 2008 election said would be overrunning California to deliver billions of dollars for high-speed rail hasn't generated even a plug nickel.

Monday's vote was critical to make sure high-speed rail has a shot at funding from the cap-and-trade credit auctions to complete the Bakersfield to San Jose/San Francisco segment. The initial 29-mile segment from a point near Madera to a point south of Fresno is now moving forward to construction. Back in 2014, the carbon reduction program was tapped for a one-time infusion of $250 million for high-speed rail as well as 25 percent of all future cap-and-trade auction proceeds. The auctions have been projected to generate as much as $2 billion a year. While $500 million a year would be a drop in the bucket for the $68 billion and counting price tag, it will keep high-speed rail coming down the track.

High-speed rail aside, the passage of the decade extension to the cap-and-trade law was probably the most pro-business move California could have made within the confines of the Golden State regulatory and fee hell.

One reason is certainty. As a businessman when you've got money on the line knowing the government isn't going to pull the rug out from under you is a plus even if can't stomach the basic rule.

The other reason is reasonability. If you don't like the cost of doing business under the cap-and-trade program that Gov. Jerry Brown created, imagine what it would be like with Gavin Newsom as governor. Say what you want about Brown but besides being a lot more fiscally conservative and pragmatic, he comes across as anti-government compared to Newsom.

Had the future of cap-and-trade come up with a new governor in office, forces that argued the program was far from being aggressive enough could have prevailed.

What the vote did was lock in a "fee" or "tax" - however you look at the cap-and-trade program - for the next 13 years. And while the charge for pollution credits is fluid given it is what the market does, it is a lot better than the host of more draconian measures being pushed by those who are less environmental protection and are more environmental perfection.

That said, Brown's dire rhetoric that civilization itself was in the hands of the California Legislature as failure to act would unleash the equivalent of the zombie apocalypse was a tad over the top.

If you haven't noticed Brown treats all of his so-called "legacy" projects as if they are a way of staving off the end days whether it is high-speed rail or the Twin Tunnels.

Of course, all of this is ultimately costing you, and not big corporations, money.

The nonpartisan legislative analyst office staff in 2016 indicated the cap-and-trade program added 11 cents to every gallon of gasoline sold in California as oil companies passes on the cost. Some contend it is more like 20 cents a gallon.

The hidden cost of cap-and-trade is also collapsed into the price of other products such as food.

Brown savors parading cap-and-trade as a model for the rest of the world to follow. He would like to see other states and nations put in place similar measures to counter rising temperatures and reduce greenhouse gas emissions.

If nobody else does it, we're supposed to feel good about it while being nickeled and dimed as we breathe in the carbon emissions floating across the Pacific Ocean and state lines while basking in 120 degree summers.

Whether that happens or not has yet to be seen. The only thing for sure is we will be paying the price for the next 13 years. Even if there is nothing measureable to show for it in the year 2030, we will be better off with what's in place that the massive social engineering programs in the name of reducing greenhouse gas emission that were being pushed.

It says a lot about the times we live in when it makes perfect sense to resign oneself to keeping a program in place that is costly and has still unproven outcomes than allowing fear and extremism replace it with something more draconian.

This column is the opinion of Dennis Wyatt and does not necessarily represent the opinion of Morris Newspaper Corp. of CA.