Non-partisan political analysts targeted Governor Gavin Newsom’s proposal to use $ 1 billion in state funds to sow innovative climate change efforts, questioning the state’s ability to identify the right plans as well.
The Climate Catalyst Loan Fund, which Newsom requested in its budget proposal of $ 222.2 for next year, would offer low-interest loans to public and private projects that would otherwise have difficulty attracting venture capital or bank loans, in particular those intended to combat the climate impacts of the recycling, transport, agriculture and forestry sectors.
By Rachel Becker
But experts from the California analysts’ legislative office, which assesses state policy and advises the California legislature, said the proposal is “not adequately justified,” according to a report released on February 13.
Brian Weatherford, a senior tax policy analyst who assessed the loan proposal, warned lawmakers that the administration may not be able to identify the best projects to finance. On the one hand, the proposal is inherently risky, the LAO noted, as it focuses on projects that do not qualify for other loans or grants and which could fail. If they cannot repay the loan, this could drain the program.
If, on the other hand, the state finances safer projects already eligible for conventional loans or grants, it would not help California cut greenhouse gases more than it already is. “They have to be able to repay the loan. So they can’t be too risky and if they are super safe, they can probably get financing from a conventional lender,” said Weatherford.
Weatherford and his team suggested starting smaller with a pilot project
The budget proposes to raise the loan fund for climate catalysts to $ 1 billion in four years. But Weatherford and his team suggested starting small, with a pilot project. “We want them to demonstrate the need for the fund. And to provide some certainty or clarity on what types of projects will get loans – and therefore demonstrate that those projects actually need the loan,” said Weatherford.
Newsom press secretary Vicky Waters said the need is too urgent to wait. “California is looking forward to making major investments that implement and scale technologies to achieve our climate goals,” he said. “We are looking forward to working with the legislator on this issue.”
The Climate Catalyst Fund was the only piece of Newsom’s climate proposals that was deeply rejected by analysts.
The team praised, for example, the administration’s proposal to spend an additional $ 25 million a year until 2025 on climate adaptation research and support for vulnerable communities. But analysts have encouraged the legislator to provide guidance on how exactly that money should be spent.
It’s the same feedback the team had on Newsom’s proposal for a climate bond, which asks voters to approve $ 4.75 billion to deal with the impacts of climate change, such as floods, fires, sea level rise and heat extreme. The analyst’s office generally supported the effort, but encouraged the legislator to clarify exactly which projects should be prioritized, and how the state will assess the effectiveness of the effort.
The available funding could decrease further in the future
“The administration is asking for a lot of leeway on how to spend this money, and we don’t think the legislator should put off much of the decision-making process to the administration,” said Rachel Ehlers, chief tax and political analyst at the Legislative Analyst’s Office.
A source of funding, however, came with a warning. Newsom’s budget proposal included $ 250 million reduced to projects funded by the California cap-and-trade program, which generates revenue when major greenhouse gas polluters buy permits to cover their emissions.
California is already channeling billions of cap and trading dollars in projects ranging from discounts on clean vehicles to solar water heating. But this year, there are a few hundred million dollars less available for the budget.
The report warns that available funding could decrease further in the future and suggests that California lawmakers set priorities and determine where else to look for money.
“This year’s financing plan is a little less than in previous years, and this is due to the reduced availability of money, which means that the legislator will have to make some difficult decisions on how to prioritize its financing,” he said. said analyst Ross Brown.