March 19 (Bloomberg) -- California should start a state-run bank to finance economic development that’s less polluting and more environmentally friendly, financed by auctions of greenhouse-gas carbon credits, Lieutenant Governor Gavin Newsom said.
The Green Infrastructure Bank, which would make low-interest loans to local governments or private business for projects that would help reduce greenhouse-gas emissions, would have the authority to sell tax-exempt and taxable municipal revenue bonds, according to legislation sponsored by Newsom, a Democrat and former San Francisco mayor.
California’s first-in-the-nation law sets a maximum for carbon emissions from power generators, oil refineries and others, to lower greenhouse gases. Under the legislation’s cap-and-trade program, industries that can’t make the required reductions can buy allowances allocated and auctioned by the state and a limited number of offset credits generated from projects that reduce emissions.
“The intent of the legislation is to centralize greenhouse gas-reducing financing to a central bank which can leverage private capital to mitigate risk and exponentially increase infrastructure financing,” Newsom, 46, said in a statement yesterday.
The state Air Resources Board sold 23.1 million allowances at $10.09 each during its first auction Nov. 14 and another 12.9 million at $13.62 during its second in February.
Companies have also bought 10 million “advance” allowances that they can use to cover their emissions in future years of the program.
Money from the auctions is supposed to be spent only on reducing greenhouse gas emissions. Newsom’s bill would include the Green Infrastructure Bank under that requirement.
California Governor Jerry Brown, a 74-year-old Democrat, counted $200 million from the sale of the credits in the current year’s budget and another $413 million for the fiscal year that begins July 1.
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