California is facing a major vote in the days ahead — and no, it’s not who will be the next governor. |
Regulators at the California Air Resources Board are set to decide on May 28 whether to approve the latest blueprint for limits on greenhouse gas emissions from major polluters through 2045, a program known as cap-and-invest. The update to the state’s signature climate program has Sacramento in a tizzy and seemingly no one is pleased with the proposal on the table. |
California is one of a handful of states, and the first, to have an an enforceable annual limit on the emissions that change the climate. |
After a January draft was criticized by both industry and lawmakers over concerns that capping emissions too much and too quickly would drive up already soaring energy costs, CARB went back to the drawing board and came up with the latest iteration, unveiled in April. But opponents now say the plan kowtows to oil and gas interests who are lobbying hard for concessions, citing an already unstable state and international energy market. |
The program works by setting a limit on the greenhouse gases that industries can emit in California. Companies must obtain credits, or allowances, for every ton they release, with the total number of allowances declining over time, consistent with what scientists say actually addresses climate change. The auctions for unused allowances generate billions of dollars in revenue for the state each year that fund clean energy, clean water and other key climate programs. |
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This year’s original draft sought to remove 118 million allowances from the market by 2030, which it identified as the minimum that must be retired to meet the state’s ambitious climate goals. But the April revision upends that, instead creating a new pool of 118 million “compliance instruments” — defined as allowances or offset credits — above the cap that companies can earn if they invest in decarbonization projects. |
Critics argue this first-of-its-kind mechanism, called the Manufacturing Decarbonization Incentive, effectively dismantles the program. |
“The whole goal of the cap is to lower emissions over time,” said Mary Creasman, chief executive of the nonprofit California Environmental Voters. “To then allow pollution above the cap is kind of blowing up the program.” |
CARB maintains that this change still cuts the emissions coming from California, because the new instruments enter the market only “if they’re applied for, are approved, and deliver verified greenhouse gas emissions reductions.” And the proposal still results in an 11% cap decline year over year through 2030, and 7% from 2031 to 2045, said spokeswoman Lindsay Buckley. |
The move would also significantly reduce cap-and-invest’s revenue, according to an analysis from the Legislative Analyst’s Office. It found that the new plan would result in a loss of $2 billion, or roughly 50% less money per year for the state’s Greenhouse Gas Reduction Fund, than it has received through the program in recent years. |
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Many of the lawmakers who voted to reauthorize the program last year are also concerned. Nearly 30 Democrats signed a recent letter urging the air board to “push back on pressure from an oil industry that is making hundreds of billions in wartime profits.” |
The fossil fuel industry has indeed lobbied heavily against requirements that it pollute less, spending a record $10.3 million in the first quarter of this year to influence state policy around cap-and-invest and other climate and energy issues, state records show. Among them are the Western States Petroleum Assn., Chevron and Phillips 66, which have argued that lowering the pollution cap will drive up gasoline prices and push more refineries out of the state. |
But even they are not thrilled with the latest iteration of the cap-and-invest plan. |
“We need to continue to be competitive with other refineries throughout the world, and while there are some very short-term changes within the [revised package], it still doesn’t have the long-term certainty that will drive investment,” said Jodie Muller, WSPA’s chief executive. Muller said she’d like to see the new decarbonization incentive program extended beyond 2030 and eligibility expanded to include additional activities, such as refinery maintenance programs. |
“It’s important that we get this right,” she said. |
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More California climate news |
Gov. Gavin Newsom recently unveiled his revised $350-billion budget proposal, which came with an unexpected $16.8-billion increase in tax revenue largely attributed to the success of artificial intelligence companies. Among the plan’s big wins and losses are boosted funding for public schools and higher health premiums for undocumented immigrants. |
On the environment, the plan broadly maintains funding and policy support for climate commitments, such as a $200-million incentive program for passenger electric vehicles designed to make up for federal tax credits canceled by the Trump administration. It also includes a new $100-million disaster rebuilding fund to help wildfire survivors rebuild their homes. |
But the plan does not include major new spending on the environment, in part due to the ongoing restructuring of cap-and-invest, the state’s main climate funding source. Some environmental groups said the revised budget doesn’t do enough to support California’s clean energy transition or hold oil and gas companies accountable for their role in the climate crisis. |
Katelyn Roedner Sutter of the nonprofit Environmental Defense Fund urged lawmakers to prioritize proven climate investments in the final budget agreement, such as virtual power plants and incentives for zero-emission delivery trucks. “The actions we take over the next decade are vital to preventing the worst possible scenarios for our kids’ future,” she said. |
A few more things |
Speaking of the governor’s race, California Resources Corp., one of the state’s top oil producers, just made a hefty $500,000 contribution to an independent campaign committee supporting leading Democratic candidate Xavier Becerra, Politico reported. Becerra has already been criticized for accepting a $39,200 donation from Chevron, while opponents Tom Steyer and Katie Porter have both pledged not to accept contributions from fossil fuel companies. |
Fervo Energy, a Houston-based geothermal developer with a major Google project in Utah, raised $1.89 billion in an initial public offering this month. The company’s $7.7-billion valuation signals growing investor appetite for energy companies amid soaring demand for electricity fueled by the growth of AI, the Wall Street Journal said. Geothermal technology taps into pockets of steam and hot water rising from the center of the earth, which is then used to spin turbines to generate power. |
Los Angeles is gearing up for its role as a host city of the 2026 World Cup, which will be held in 16 stadiums across Canada, the U.S. and Mexico beginning in mid-June. But experts told my colleague Blanca Begert that the tournament’s expansion will make it “the most emissions-intensive World Cup that we’ve ever seen,” in part because fans and players will have to traverse the three countries to watch the games. Jet exhaust is a major contributor to climate change, representing 3% to 4% of all warming. It is the second of our stories examining the environmental implications of the coming World Cup. |
