California Weighs $4 Billion in Free Emission Permits as Gas Tops $6 a Gallon
Updated
Updated · CalMatters · May 18
California Weighs $4 Billion in Free Emission Permits as Gas Tops $6 a Gallon
6 articles · Updated · CalMatters · May 18
Up to $4 billion in new free carbon permits is under review by the California Air Resources Board, with about half earmarked for refineries and other fossil-fuel companies if they promise clean-energy investments.
The May 28 proposal is meant to keep fuel supplies reliable and avoid more refinery closures after two plants shut in six months and California gasoline averaged above $6 a gallon during Iran-Israel war turmoil.
Environmental groups and some lawmakers say the plan could gut the cap-and-invest system because the 118.3 million-permit pool matches the reductions California says it needs by 2030, while oversight of promised investments is weak.
State budget stakes are also high: the Legislative Analyst's Office estimates auction revenue could fall from about $4 billion a year to roughly $2 billion, and utility climate credits could shrink by as much as $1.7 billion.
The fight has become a test of Gov. Gavin Newsom's climate strategy, with oil and gas interests spending $10.3 million lobbying Sacramento in the first quarter as California tries to cut emissions without worsening energy costs.
Can California achieve its climate goals by giving billions in free pollution permits to oil companies?
Is a potential drop in gas prices worth a $2 billion cut to California's climate and community programs?
High Stakes for California: The $4 Billion Carbon Market, Soaring Gas Prices, and the Battle Over Free Permits
Overview
California faces a severe energy crisis, with the highest gasoline prices in the nation and fears of fuel shortages. Experts warn that if global oil disruptions continue, prices could rise even more, putting extra pressure on consumers. The state's Cap-and-Invest program, designed to cut emissions, is at the center of a heated debate. While some argue for stricter limits to meet climate goals, others worry about higher costs and energy supply risks. This tension highlights the challenge of balancing ambitious environmental policies with the need for affordable and reliable energy for Californians.