Calif. Just Spent $622M Cap-and-Trade Dollars. Here’s Where

California is spending more of the money generated by its cap-and-trade program for carbon emissions, handing out nearly $622 million this year, with additional dollars on the way.

The money includes $457 million toward construction of a planned high-speed rail line to connect Los Angeles and San Francisco; $90 million for cleaner cars, trucks and other vehicle efforts; and $75 million for transit projects.

Big winners in the transportation category announced last week were rail, trolley and other transit programs in Los Angeles, San Francisco, San Diego, Orange County, the Santa Clara Valley and the broader Southern California region. Those places grabbed a combined $45.9 million of the $75 million total. The dollars funded 10 projects.

There also were smaller amounts like nearly $129,000 to purchase and install three bike racks linked to transit in Torrance, a city near Los Angeles; more than $120,000 for solar panels at a transit maintenance facility plus an electric charging station for electric buses in Kings County; and $5,900 for transit vouchers for veterans in Humboldt County.

“These projects are not only going to show very real benefits to local communities but will help build a more sustainable transportation system that will benefit all Californians,” said Malcolm Dougherty, director at the California Department of Transportation (Caltrans), which is in charge of the $75 million. “These projects are not only going to make public transportation more efficient and affordable to more Californians, but make it more climate friendly, as well.”

Top transportation recipients of cap-and-trade cash

Los Angeles County Metropolitan Transportation Authority (Metro)$9.8 millionExtend Metro Expo Line light rail to Santa Monica, Calif.
San Francisco Municipal Transportation Agency$8.2 millionExpand service on five routes
Los Angeles County Metropolitan Transportation Authority (Metro)$7 millionExtend Metro Gold Line light rail to San Gabriel Valley, Calif.
San Francisco Bay Area Rapid Transit District$4.5 millionBuy four electric-powered rail cars
San Diego Metropolitan Transit System$3.7 millionBuy light-rail vehicles for trolley system
Orange County Transportation Authority$3.59 millionReduce bus fares for 10 months to increase ridership
Santa Clara Valley Transportation Authority$3.59 millionBuy five electric buses, three fast-speed EV charging stations
Metropolitan Transportation Commission (San Francisco)$3.59 millionReplace fare card equipment and devices on buses and rail vehicles
Southern California Regional Rail Authority (Metrolink)$2 millionBuy locomotive for use in expanded service

Source: California Department of Transportation

The Golden State’s economywide carbon trading system, the only one of its kind in the country, auctions allowances to businesses that need the permits to cover high greenhouse gas emissions. Those started at $10 a carbon ton and were $12.73 in the latest auction. Sales of carbon permits have reaped nearly $4 billion for California through February, the latest time frame available. That total doesn’t include the portion that is controlled by the Public Utilities Commission and returned to utility ratepayers.

California wants to shrink greenhouse gas emissions 40 percent below 1990 levels by 2030. Spending cap-and-trade proceeds to help achieve that goal is one part of the state’s broad approach, Mary Nichols, chairwoman of the state’s Air Resources Board (ARB), has said.

California right now is doling out money from the 2015-16 fiscal year budget. Because the amounts generated by cap-and-trade auctions aren’t guaranteed, the state allocates the money in general after it comes in, and sometimes at lower amounts than budgeted, with the rest carried over to the next year. There’s a process where funds go through a number of agencies, with each in charge of a different spending category. Several of those agencies take applications for the money and give out grants.

The categories for spending 60 percent of the cap-and-trade money are locked in, for now. Under a deal Gov. Jerry Brown (D) made with the Legislature, that portion is continuously dedicated to specific categories, including the bullet train, affordable housing near transit, intercity rail programs and low-carbon transit operations.

More money will be given out later this summer for sustainable housing, intercity rail and some other programs.

The Legislature gets to decide how to spend the rest of the auction proceeds. Lawmakers haven’t decided on where to put any of the funds under its control. To date, it has about $1.4 billion it can spend.


The bullet train was the top benefaciary in that pact Brown made. A quarter of auction proceeds go to the line’s construction. It received $457 million in fiscal 2015-16. That has gone toward land acquisition and construction costs of the project, the governor’s office said.

High-speed rail through fiscal 2015-16 had received $850 million total in cap-and-trade dollars, according to a Brown administration report given to the Legislature in March. It continues to be a controversial project, with some lawmakers arguing that it’s too expensive and will take too long to be finished, and that it should be canceled and the dollars spent elsewhere. There also have been questions about its climate impact, as it won’t cut greenhouse gas emissions until it’s completed.

“Every time the Governor talks about the budget he should start with an apology to the people for supporting the money pit that is the High Speed Rail,” state Sen. Ted Gaines (R) said in a statement after Brown released his revised budget for fiscal 2016-17 in May.

Brown has said that the state needs to think long-term in terms of the train. The report to the Legislature on cap-and-trade spending said that the $850 million spent so far on bullet train construction would cut emissions by 44 million metric tons of carbon dioxide equivalent over a 50-year time frame.

Right now, the state’s High Speed Rail Authority is building a 119-mile stretch in the Central Valley that’s supposed to be a starting point for expanding north to San Francisco and south to Los Angeles. That part won’t be done until 2025.

The report on cap and trade praised the construction project as helpful to the state’s Central Valley. State law on the cap-and-trade money requires that one-quarter be used for the benefit of disadvantaged communities, with 10 percent spent in those communities.

“The High Speed Rail Project is expected to greatly benefit Central Valley communities where unemployment is more than double the state’s current average of 5.7 percent,” it said. “Over time, the project will create thousands of direct construction-related jobs and will lead to permanent operations, maintenance, and manufacturing jobs.”


The $75 million given for transit is also under the continuously appropriated monies, a segment called the Low Carbon Transit Operations Program. Proceeds go to “local transit agencies to support new or expanded bus and rail services, or expanded intermodal transit facilities” such as equipment, fueling and maintenance, said Caltrans. This category gets 5 percent annually from cap-and-trade auction proceeds.

Caltrans distributed the money to 131 projects. The least expensive was the $5,900 for veterans’ transit vouchers in Humboldt County. The most costly was $9.8 million for the Los Angeles County Metropolitan Transportation Authority’s Expo Line. That light-rail service connects Union Station downtown to Santa Monica. It was completed this spring.

The L.A. agency known as Metro also got $7 million to support the Metro Gold Line, which has added six stations to extend its light-rail service to the region’s San Gabriel Valley, east of Los Angeles.

In both cases, the money pays for operating expenditures for those lines, said Frank Flores, executive officer of countywide planning and development for Metro.

The Greenlining Institute, a Berkeley-based group that argues for spending more of the cap-and-trade funds to help disadvantaged communities, said it supports using the money for ongoing transit operations.

“We like the idea of funding transit operations and operating expenses because, in general, transit operations are chronically underfunded,” said Bruce Mirken, media relations director with the group. Economically disadvantaged and ethnic minority communities already deal heavily with transit that’s chronically underfunded, he said.

“Bolstering that, improving that is in general a good thing,” he added.

Transit improvements also are a good use of cap-and-trade dollars, he said.

“It ought to go to making it better, making it serve more people more efficiently, because that’s what gets people out of cars and improves traffic,” Mirken said.

Other money under transit included $8.2 million to the San Francisco Municipal Transportation Agency to support expanded service on five routes “to improve access to public transit by increasing the number of trips,” it said in its application. The San Francisco Bay Area Rapid Transit District received $4.5 million to buy four new electric-powered rail cars.

The Santa Clara Valley Transportation Authority received $3.6 million to purchase five zero-emissions electric buses and three fast-speed electric vehicle charging stations, and to make related electrical improvements. Another nearly $3.6 million will go to the Orange County Transportation Authority for reducing bus fares in the entire service area for 10 months, a bid to boost ridership.


Cap-and-trade proceeds also are funding incentives for people to buy electric vehicles and other zero- and low-emissions cars.

ARB for fiscal 2015-16 spent $75 million on rebates people receive for buying qualifying clean cars. Those ranged from $1,500 for plug-in electric vehicles to $5,000 for fuel-cell electric cars.

Between September of last year and this May, the program gave out 32,603 rebates, said Chuck Colgan, with the Center for Sustainable Energy, which assists ARB with the incentive.

The agency doled out another $10 million for an effort to get people to trade in polluting cars for cleaner options. The projects are being run by air districts in Los Angeles and the San Joaquin Valley. In Los Angeles, motorists applying for the Replace Your Ride project can receive from $2,500 up to $4,500, depending on income level and type of vehicle purchased.

ARB also spent $5 million of cap-and-trade money on a rebate program aimed at replacing trucks with cleaner options.