California Democrat Proposes Bill to Postpone Cap-and-Trade Expansion

By Rory Carroll

A California Democrat recently proposed a bill aimed at keeping gas prices lower by postponing the state’s planned expansion of its carbon cap-and-trade program to include transportation fuels next year, a decision that has sparked anger among environmentalists.

Assemblymember Henry Perea argued that a three-year delay is necessary to prevent the state from generating billions of dollars through carbon permit sales to fuel suppliers, which could burden residents trying to recover from a prolonged economic downturn.

"In regions like the Central Valley, where residents often have to drive long distances, they will bear the brunt of increased gas prices,” noted Perea, who represents Fresno.

Experts predict that expanding the program could lead to a rise in gas prices by roughly 12 cents per gallon next year.

However, the agency responsible for overseeing the program insists that including fuels is crucial for California to achieve its carbon reduction goal of 1990 levels by 2020.

“The cap-and-trade initiative is part of a suite of complementary programs aimed at reducing greenhouse gas emissions across the state to address climate change,” explained Dave Clegern, a spokesperson for the California Air Resources Board. “Our forecasts suggest that by 2020, these initiatives will actually reduce the cost of driving by approximately $400 annually per driver.”

Environmental advocates criticized the proposed bill, describing it as a last-minute effort by oil companies to evade regulations they have long contested.

“It’s disheartening that some legislators are yielding to oil company pressure tactics, overlooking California’s pioneering strides in reducing carbon emissions and the tangible economic benefits these measures are generating for their constituents,” stated Adrienne Alvord from the Union of Concerned Scientists.

Since its inception in 2013, California’s cap-and-trade program has mandated large manufacturers, oil refineries, and power companies to account for their carbon emissions by either reducing them or acquiring carbon permits. Quarterly auctions for these permits have generated over $700 million for the state, which will be allocated towards low-income housing near public transportation and the planned high-speed rail project.

Excluding transportation fuels from the carbon market would decrease the expected revenue from the program in future years.

Despite the introduction of the bill, the carbon market seemed unfazed. Carbon permits for December delivery were priced at $11.95 each on the secondary market, marking a slight increase from the previous day’s closing rate.