Businesses looking to invalidate California's fee for carbon pollution take their arguments to a state appeals court Tuesday in a case that could determine the future of one of California's signature efforts to combat climate change.
With a central piece of Gov. Jerry Brown's legacy on the line, lawyers for the state and for environmental advocacy groups will defend a program that has been closely watched around the world as a potential model for controlling carbon emissions.
Uncertainty surrounding the case has already been a major factor in upending the market for pollution permits, which consistently raised hundreds of millions of dollars a year until demand plummeted in 2016.
The courtroom battle comes as California's climate initiatives, some of the most aggressive in the world, face their biggest threat yet from a new president, Donald Trump, who has vowed to loosen environmental regulations.
California's "cap-and-trade" program is a central piece of a wide-ranging series of regulations meant to reduce the emissions of heat-trapping gases. The state places a limit on emissions and reduces the cap over time. Permits to pollute, known as allowances, are auctioned quarterly to affected companies or to investors, who can hold onto them for future sale to polluting companies that exceed their emissions cap.