The big fossil fuel companies wanted to avoid paying for the carbon pollution from their products via California’s cap-and-trade program. They tried to scare California residents about the looming gas price increases. They found an ally in Assemblyman Henry Perea (D-Fresno), who introduced AB 69 to delay including fuels under the cap. As I blogged about a few weeks ago, the money for the fuel pollution allowances would fund transit and electric vehicle programs, among other pollution-reducing technologies.
Now good news: State Senate President Darrell Steinberg prevented Perea’s bill from even coming up for a vote. That avoids the messy political problem of forcing legislators to weigh in on this issue during an election year. As I wrote about, the gas price increase is likely to be negligible, and there’s no reason oil companies can’t simply absorb the cost from their $200 billion annual profits, rather than passing it along to consumers.
Steinberg wrote a forceful letter to Perea explaining his logic, worth reading in full. So now fuels will come under the cap on January 1st, and California will use the revenue from the pollution allowances to fund the ongoing transition to a cleaner, cheaper and more sustainable form of transportation. And once under the cap, it will be difficult for the oil and gas interests to remove it later. Overall, this is excellent news for California’s fight to reduce greenhouse gas emissions and bolster our clean tech sector.
California’s cap-and-trade program is an important part of the overall effort to reduce greenhouse gas emissions to 1990 levels by 2020. The cap went into operation in 2012 with compliance required in 2013. So far, the program has generated close to a billion dollars in annual auction revenue from regulated sources that need to buy allowances to emit greenhouse gases. The cap is phasing in over time, and so far only large, industrial-type emitters and utilities are included.
That will change on January 1, 2015, when transportation fuel providers come under the cap. Or I should say “if” they come under the cap. The oil and gas industry is launching a big campaign to keep that from happening. They already won this two-year reprieve from the launch. At stake is a huge amount of auction revenue and a relatively small increase in gas prices that would spur innovation for more fuel-efficient vehicles.
Perhaps seeing the writing on the wall, State Senator Darrell Steinberg earlier this year proposed a preemptive retreat by removing fuels from the cap and creating a carbon tax as compensation. Environmentalists shot that proposal down, but they may now have a tough time keeping fuels under the cap. If they fail, they will be left with nothing, making Steinberg’s proposal seem like a missed opportunity.
Billionaire climate-fighter Tom Steyer is pledging to spend what it takes to keep fuels under the cap, according to the Los Angeles Times. Let’s hope he and the environmental community have success. Otherwise it will be a lot harder for California to meet its climate goals and encourage the technological innovation we need to wean ourselves off polluting fossil fuels in favor of cheaper, clean energy.
