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With only three weeks left in the legislative session, there are a number of other pressing matters to address as the Capitol is consumed by Governor Gavin Newsom’s efforts to redraw California’s congressional districts in an effort to counter a pro-Republican gerrymander in Texas.
These include a new initiative to restart home building, the question of whether California should integrate its electrical system with other Western states, artificial intelligence regulation, and the renewal of the state’s cap and trade program to reduce greenhouse gas emissions.
Political disputes abound in all of them, but cap and trade issues are especially complicated.
In theory, the money raised by the state Air Resources Board’s quarterly emission permit auction is used to lower greenhouse gas emissions. Newsom wants to extend the program for another 15 years, with some modifications, as it is scheduled to expire in 2030.
The macropolitics of the problem are that, whereas business associations and industries that release gas support its renewal as a reliable means of achieving emission reduction targets, environmental organizations view it as a corporation purchasing exemption from pollution. Direct regulation of individual companies is what they would desire.
Issues like continually declining emission auction proceeds, which emitters should receive free licenses for essential products, and how auction funds should be allocated are all part of that struggle.
The program should be renamed cap and invest, according to Newsom. In order to encourage more investments in carbon reduction and sustainable technology, the state budget that he approved in June announced the creation of a steady and predictable price on carbon pollution.
To date, the auctions have raised about $30 billion, but not all of that money has been allocated to successful carbon reduction initiatives. Instead, some are being used to fund financially distressed initiatives.
To keep the state’s much-discussed bullet train project afloat, for example, Newsom wants to continue allocating at least $1 billion annually in auction proceeds. Theoretically, electric trains would save carbon emissions by taking the place of cars and airplanes, but the evidence supporting this claim is dubious.
According to the state’s own estimates from a few years ago, a fully developed north-south system would cut daily auto travel by 16.3 million vehicle miles. Despite its stunning sound, that represents less than 2% of the almost one billion miles that Californians drive every day. Carbon emissions are also coming from the building of bullet trains.
Additionally, Newsom wants auction proceeds to be used to combat the state’s numerous wildfires, which are significant sources of pollution. It would do little or nothing to stop those fires, but it would reduce that load on the general fund budget.
One of the biggest issues, at least politically, is the impact on Californians living costs. According to the Legislative Analyst’s Office, it is commonly known that emitters raise prices by 23 cents per gallon of gasoline.
Andy Walz, an executive at Chevron, stated at a session on the topic hosted by the Public Policy Institute of California on Thursday that refiners take cap-and-trade prices into account when determining whether to stay in business in the state. There were once dozens of refineries in California, but now there are just nine, and two of them have plans to close. Just months after criticizing refiners as price gougers, Newsom and lawmakers are now urging them to stay in business in order to prevent significant price rises as the economy transitions to a zero-emission one.
According to a new PPIC poll, most Californians support the state’s efforts to cut carbon emissions, but they also oppose the state’s raising energy prices in the process.
The decision about whether to renew cap and trade and how to pay for it is influenced by this divided mindset.
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