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.
The fight over keeping transportation fuels under California’s cap-and-trade program is heating up. Assemblyman Henry Perea (D-Fresno) has an op-ed in the San Francisco Chronicle today arguing that delaying the fuels phase-in is a moral imperative to keep gas prices from rising:
Californians have a right to live healthy lives in a clean environment. But in areas like the Central Valley, people need to drive long distances, and thus would be affected disproportionately by rising gas prices. Delaying this action for three years to create greater public awareness and time for a more thorough discussion about viable climate change policy is not only responsible, but imperative to protect those most vulnerable.
But economist Severin Bornstein at the UC Berkeley Haas School of Business notes that the likely price increase for a gallon of gas will be 9-10 cents, which could be offset by the following consumer measures:
- Drive 70 mph instead of 72 mph on the freeway. That difference would improve your fuel economy by about 2.5%. The savings are much larger if you actually drive the speed limit.
- Buy a car that gets 31 MPG instead of 30 MPG. That will get you more than a 3% savings in fuel cost, more than offsetting the price increase.
- Keep your tires properly inflated. The Department of Energy estimates that underinflated tires waste about 0.3% of gasoline for every 1 psi drop in pressure.
The real motivating force for Perea’s efforts seems to be politics, and particularly the scare tactics of the oil and gas industry. As E&E Publishing reported last week (subscription required) from a Sacramento event on climate policies:
Assemblyman Mike Gatto (D) appeared in Perea’s stead and defended his position, saying that elected officials are under more scrutiny than appointees and have to respond to the will of the people as well as political pressures. If gasoline prices rise, Assembly members, who run for office every two years, will be punished, he said.
“We might recognize the price of oil is something that is set by the world commodity markets, but do the people understand this?” he asked. “If the price of gas spikes and the press picks up on it … and people start tying it into these regulations, it will not matter what the truth is.”
“They can’t vote [Air Resources Board Chairwoman] Mary Nichols out of office, but you know who they can vote out of office?” he asked.
Keeping transportation fuels under the cap will have significant benefits for the working poor as well as for the environmental and economic climate in California. Auction revenues from the program will fund public transit, low-carbon transportation options, and affordable housing, while the slight increase in gas prices may spur efficiency gains to reduce emissions that often harm low-income communities the most. Perea’s effort to delay the fuels phase-in is a step backward for all Californians, and I hope the legislature see through this counter-productive attempt to weaken California’s otherwise successful climate program.
