On Monday, the Economic and Allocation Advisory Committee completed its recommendations on key elements of California’s proposed program to put a price on greenhouse gas emissions. Their report contains two great ideas that we hope the California Air Resources Board and the Legislature adopt.

First, they conclude that the program should rely “principally, and perhaps exclusively,” on an auction for distributing financially valuable permits, rather than giving away those permits for free to politically powerful interests. This would help ensure a level playing field where companies that have already taken measures to reduce their carbon footprint wouldn’t be disadvantaged compared to their polluting competitors. It would also prevent companies from making windfall profits by selling their free permits and pocketing the cash. The committee’s own analysis shows that California would be best served by a 100% polluter pays program.

Second, they recommend that some of the revenues generated from an auction should be invested in actions to address the causes and consequences of global warming. They highlight community planning for smart growth, transit, and clean technology development as examples of carbon-cutting activities that could be supported with these new funds. They also identify activities that would safeguard natural resources and communities from climate impacts, including sea level rise, wildfires, and extreme heat waves, specifically pointing to projects that also provide ecological services like biological carbon sequestration. And while the proposed percentage of revenues dedicated to these uses falls short of what’s needed, the report acknowledges that a larger investment may be appropriate in the early years of the program.

To protect our state’s health, economy, and environment we need a robust climate program that sends the right signals to the marketplace and creates enough public investment to reshape our communities and our institutions. Now it’s time for the Air Resources Board and the Legislature to adopt these principles and put California on the path to a sustainable prosperity.