California analysts urge lawmakers to reject Governor Newsom’s billion-dollar climate loan proposal
The legislative analyst’s office warns that California may not be able to spot the right projects to fund with a proposed green loan program.
Non-partisan political analysts on Thursday targeted Gov. Gavin Newsom’s proposal to use $ 1 billion in public funds to initiate innovative efforts on climate change, challenging the state’s ability to identify even the right projects.
The Climate Catalyst Loan Fund, what Newsom asked for in his 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, particularly those aimed at tackling the climate impacts of the recycling, transportation, agriculture and forestry.
But the California experts Office of the Legislative Analyst, which assesses state policy and advises the California legislature, said the proposal was not “sufficiently justified,” according to a report released today.
Brian weatherford, a senior fiscal policy analyst who assessed the loan proposal, warned lawmakers that the administration may not be able to spot the best projects to fund. On the one hand, the proposal is inherently risky, LAO found, as it focuses on projects that do not qualify for other loans or grants and could fail. If they can’t repay the loan, it could exhaust the program.
If, on the other hand, the state funds safer projects already eligible for conventional loans or grants, that would not help California reduce its greenhouse gas emissions any more than it does. ‘is already. “They have to be able to repay the loan. So they can’t be too risky, and if they’re very secure, they can probably get financing from a conventional lender, ”Weatherford said.
The budget proposes to increase the Climate Catalyst Loan Fund to $ 1 billion over four years. But Weatherford and his team suggested starting smaller, with a pilot project. “We want them to demonstrate the need for the fund. And provide some certainty or clarity on what types of projects will get loans – then demonstrate that those projects actually need the loan, ”Weatherford said.
Newsom’s press secretary Vicky Waters said the need was too urgent to wait. “California can’t wait to make major investments that deploy and adapt technologies to meet our climate goals,” she said. “We look forward to working with the legislature on this issue. ”
The Climate Catalyst Fund was the only part of Newsom’s climate proposals to be strongly rejected by analysts.
The team welcomed, for example, the administration’s proposal to spend an additional $ 25 million per year until 2025 on climate adaptation research and support for vulnerable communities. But analysts urged the legislature to provide advice on exactly how that money should be spent.
This is the same feedback the team had around Newsom’s proposal for a climate bond, which is asking voters approve $ 4.75 billion to deal with the impacts of climate change, such as floods, forest fires, sea level rise and extreme heat. The analyst’s office generally supported the effort, but encouraged the legislature to clarify exactly which projects should be prioritized, as well as how the state will assess the effectiveness of the effort.
“The administration is asking for a lot of leeway on how to spend this money, and we don’t think the legislature should defer so much decision-making to the administration,” said Rachel Ehler, Senior Financial and Policy Analyst in the Office of the Legislative Analyst.
One funding source, however, came with a warning. Newsom’s budget proposal included $ 250 million reduction in projects funded by California’s cap-and-trade program, which generates revenue when major greenhouse gas polluters buy permits to cover their emissions.
California is already channeling billion dollars in cap and trade in projects ranging from discounts for vehicles specific to solar water heaters. But this year, there are a few hundred million dollars less available for the budget.
The report warns that available funds could decline further in the future – and suggests California lawmakers are setting priorities and determining where to look for the money.
“This year’s funding plan is a bit lower than in previous years, and that’s due to less money available, which means the legislature will have to make tough decisions about how to prioritize its funding,” said the analyst. Ross brown.