In a split opinion, the California Court of Appeal upheld California’s cap-and-trade program for greenhouse gas emissions. The court ruled that the state legislature had given the California Air Resources Board “broad discretion” to design a system for reducing emissions and that the auction of emissions allowances did not exceed the scope of CARB’s delegated authority. The court further found that the legislature’s subsequent specification of how to spend the auction proceeds ratified use of the auction system. The court also held that auction sales of the emissions allowances were not a tax (which would have been barred unless approved by a two-thirds supermajority of the legislature) because purchase of the allowances was voluntary and because the allowances were “valuable, tradable commodities, conferring on the holder the privilege to pollute.” The purchase of allowances therefore did not bear the “hallmarks” of a tax. One justice dissented from the holding that the sale of the allowances did not constitute a tax. The dissenting justice contended that the purchase of allowances was not voluntary, that the allowances did not confer property rights, and that the court should have considered the use of the auction proceeds as relevant to the question of whether the sales were a tax. The dissenting justice further indicated that he was not convinced by the State’s labeling of “wide and varied uses” of the auction proceeds as “uses that address (not necessarily reduce), however tangentially, greenhouse gas emissions.” Counsel for one set of plaintiffs indicated that its clients would appeal to the California Supreme Court.

Challenge to auction of greenhouse gas allowances.


California Chamber of Commerce v. California Air Resources Board

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California Appellate Court Upheld Cap-and-Trade Program; Parties Planned Appeal to California Supreme Court

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

People who are less able to respond to the effects of climate change due to having limited financial or physical assets

A tax advantage is a fiscal incentive where the government reduces or exempts selected activities, goods or actors from taxes.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

Direct investments by the governments using public funds. This can be to support climate initiatives or integrate climate into other projects.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

A ban is a legal action that prevents the sale or supply of a product or service, or that recalls a product from the market. Examples are bans on SF6, greenwashing, fossil fuel advertisement or single-use plastics.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Coastal zone and marine-related actions and measures to adapt and increase resilience to climate change

Actions or measures to adapt freshwater, coastal and marine systems to climate change.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Agriculture mitigation refers to practices used to mitigate greenhouse gas emissions at every level of the agrifood systems, from production to consumption.

Actions to reduce emissions in energy generation and supply.

Terrestrial means "of the earth" and relates to the risks to ecological system that includes all living organisms and their interactions within land-based environments, such as forests, grasslands, and deserts.

Air pollution involves harmful contaminants in the air, affecting both indoor and outdoor environments. It can lead to health issues like respiratory diseases and heart problems, and climate impacts such as global warming. Pollutants can damage plants, trees, habitats, and water bodies like rivers and lakes.

Social protection systems consist of policies that help people manage social risks in order to prevent poverty and maintain decent incomes and living standards

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

People with different national or cultural traditions from the dominant population

Work that is productive and delivers a fair income, security in the workplace and social protection for all, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity.

Social and cultural groups that share collective ancestral ties to the lands and natural resources where they live, occupy or from which they have been displaced

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector involves the wholesale and retail selling of goods.

This sector involves activities to move goods and people, alongside the storage of products.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

This sector involves activities that impart knowledge and skills to individuals, including formal schooling, vocational training and educational support.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

Activities involving the catching, processing, and selling of fish for food, recreation, and industry.

This sector provides medical services, manufactures medical equipment, and develops pharmaceuticals to maintain and improve health.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

California Appellate Court Upheld Cap-and-Trade Program; Parties Planned Appeal to California Supreme Court

Target

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance