The meltdown of California’s cap-and-trade system of reducing carbon emissions has not only thrown its climate change crusade into disarray but caused collateral damage.
One victim is Gov. Jerry Brown’s $3.1 billion plan to spend auction proceeds, now on indefinite hold. It not only affects a $500 million allocation for Brown’s bullet train project, but another $500 million for “low carbon transportation and fuels.”
Senate Bill 350, carried by Senate President Pro Tem Kevin de León, would have embedded the 50 percent cut in state law. But a bloc of business-friendly Democrats, backed by an intensive oil industry opposition campaign, stalled the bill in the Assembly.
The industry spent millions of dollars on television advertisements and mailings to brand SB 350 the “California Gas Restriction Act of 2015,” and Brown and de León were forced to remove the petroleum portion to save the remainder.
“I’d say oil has won a skirmish, but they’ve lost the bigger battle, because I am more determined than ever to make our regulatory regime work for the people of California,” an obviously angry Brown vowed.
The “regulatory regime” includes cap-and-trade and an Air Resources Board program called the “Low-Carbon Fuel Standard,” which is supposed to reduce the amount of petroleum in vehicular fuel by 10 percent by 2020 and, if Brown has his way, by 50 percent by 2030.
The LCFS program got off to a slow start, due to years of litigation, but was readopted last year after being altered a bit to comply with a court ruling. It requires refiners to reduce petroleum in fuel themselves, mostly by blending alcohol or other non-carbon fuels, or pay for reductions by others through a system of credits.
When Brown vowed to achieve the 50 percent petroleum reduction without legislative approval, he was implying that the LCFS, the cap-and-trade system and other anti-carbon programs could continue past 2020 by decree even though the original 2006 legislation, Assembly Bill 32, specifically set 2020 goals.
After he made the vow, however, the Legislature’s legal office opined that AB 32’s authority expires in 2020 and Brown now implies that he now wants legislative permission to continue anti-carbon programs beyond that date.
Thus, the same legal and political uncertainty that surrounds cap-and-trade – and is a major factor in the collapse of auctions – also applies to LCFS.
The two programs are not only entwined financially and legally, but there’s an idea kicking around the Capitol to, in effect, merge the two by allowing the unsold glut of carbon emission allowances to be swapped for LCFS credits.
Meanwhile, the conflict over cutting petroleum in fuel is reverberating in this year’s elections as the oil industry and other business groups pump money into the re-election campaigns of the Democrats who blocked SB 350 last year and try to expand their ranks.