Where greenhouse gases come from
Faced with a presidential administration that’s dialing back climate change policies, California is getting even more aggressive on battling greenhouse gases.
Electric utilities in California already are working to generate half of their power through solar and other renewable energy sources by 2030, one of the most aggressive timetables in the nation. Now the leader of the California Senate is pushing a plan for utilities to go completely renewable by 2045.
Separately, Democratic lawmakers are doubling down on California’s cap-and-trade carbon market, unveiling a proposal that could increase the cost of emitting greenhouses gases for cement makers, food processors and even motorists.
What’s the upshot for consumers and the economy? Gasoline prices, already among the highest in the nation, would increase as much as 24 cents a gallon in the short run to reflect higher carbon-emission costs. Lawmakers proposed issuing “climate dividend” checks to Californians to offset the higher cost of carbon. The financial impact of an all-renewable electricity grid is uncertain.
Even if the latest proposals mean higher costs, they’re likely to be popular: 56 percent of Californians told pollsters at the Public Policy Institute of California last year they’re willing to pay more for power if it means making inroads against global warming.
Against that backdrop, California Democratic lawmakers are more than happy to make policy proposals that put them in direct opposition to President Donald Trump.
In late March, the California Air Resources Board reaffirmed its commitment to restricting tailpipe emissions, shortly after Trump directed the Environmental Protection Agency to examine the possibility of weakening those standards. Last week, legislators introduced bills aimed at thwarting a Trump executive order that loosens restrictions on offshore oil drilling.
And now comes a pair of bills designed to push California even further into the forefront of environmental policy even as the White House signals retreat on issues such as climate change.
“It’s like jiu jitsu,” said Senate President Pro Tem Kevin de León as he introduced SB 100, the bill mandating all-renewable electricity generation by 2045. “They go back, we go forward.”
Standing in front of a solar farm on the UC Davis campus, de León and other Senate Democrats took pointed jabs at Trump. In a reference to the White House’s efforts to revive the coal industry, de León said California has created more clean energy jobs “than there are coal mining jobs in the nation.”
SB 100 would speed up the timetable for California utilities to generate half of their power from renewable sources from 2030 to 2025, and would require them to be weaned off fossil fuels altogether by 2045.
Is it workable? Clearly the state’s utilities are making strides toward renewable power. Pacific Gas and Electric Co., for example, generated nearly 33 percent of its power last year from renewables, said spokeswoman Lynsey Paulo. She said PG&E supports California’s clean energy goals but is wary of proposals that expand “specific procurement mandates.” She added that the utility is still reviewing the implications of SB 100.
Renewable energy, which has traditionally been more expensive than gas-fired generation, has become increasingly cost-competitive in recent years. Yet Severin Borenstein, a UC Berkeley energy economist, said it’s unclear if California’s power grid can sever itself completely from fossil fuel.
“We are nowhere near knowing how to run a system cost effectively that’s 100 percent renewable,” Borenstein said. Californians pay about 17 percent less each month for electricity than the average American, according to federal data.
Despite the uncertainty of moving into a post-fossil fuel world, California officials are clearly galvanized by the idea of thumbing their noses at the Trump administration when it comes to energy, the environment and climate change.
“You’re seeing a renewed enthusiasm in the current political moment,” said Danny Cullenward, a Stanford University energy economist and lawyer who is advising Senate Democrats on the proposed overhaul of the cap-and-trade program. “There’s a lot of enthusiasm for standing up and saying we’re doubling down.”
Cap and trade, which began in 2012, sets a market-based price on carbon emissions for hundreds of manufacturers and other California companies. The program is due to expire in 2020 and uncertainties about its future have contributed to lackluster pricing. Carbon permits auctioned off by the state have never sold higher than the “floor price” – $13.57 a ton at the next auction later this month. Although the auctions have cost businesses billions of dollars, experts say the per-ton prices are too low to prod them into reducing emissions; most emissions permits are handed out for free.
SB 775, by Sen. Bob Wieckowski, D-Fremont, would extend the program but with significant changes. Starting in 2021, the floor price for a ton of carbon would start at $20 and jump $5 a year. There would be no free permits. Companies would no longer be allowed to use “offsets” – such as investments in forestry programs – as substitutes for emissions permits.
“It’s going to make it a lot more expensive for businesses, and consumers,” said Jon Costantino of Tradesman Advisors Inc., an Auburn consulting firm that works with companies on complying with carbon regulations. “It’s a major revision to the program.”
The impact would be felt by practically every Californian. Gas prices could increase by 3 to 11 cents a gallon in 2021 as fuel wholesalers pass on their higher carbon costs to motorists, according to an analysis written by Cullenward and Michael Wara, a Stanford environmental lawyer. Prices would rise even higher in future years.
The bill’s advocates, however, said the legislation would protect businesses and consumers against potential price spikes. Besides funding various “green” initiatives, the state-run auctions would generate a “climate dividend” for every Californian – a check in the mail from the Franchise Tax Board to offset projected increases in gasoline prices and other goods.
SB 775 also would set a $30 maximum on carbon prices to start, a ceiling that would grow by $10 a year. An “economic competitiveness assurance program” would force out-of-state companies to buy carbon emissions permits when they sell products in California in competition with in-state companies that must comply with cap-and-trade requirements. California manufacturers trying to sell goods out of state would receive partial exemptions from the carbon regulations.
“It creates a level playing field,” Wara said.
The California Chamber of Commerce, which has led an unsuccessful court challenge against the current version of cap and trade, said it’s still studying the proposal.