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California
is facing a major vote in the days ahead
— and no, it’s not who will be the next
governor.
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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.
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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.
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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.
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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.
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Critics
argue this first-of-its-kind mechanism,
called the Manufacturing
Decarbonization Incentive,
effectively dismantles the program.
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“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.”
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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.
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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.”
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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.
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But
even they are not thrilled with the
latest iteration of the cap-and-invest
plan.
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“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.
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“It’s
important that we get this right,” she
said.
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More
California climate news
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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.
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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.
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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.
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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.
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A
few more things
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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.
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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.
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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.
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