4 days ago
Democrats take on their problem climate policy
With help from Camille von Kaenel, Anne C. Mulkern and Chelsea Harvey
CARBON CURVEBALL: President Donald Trump is threatening California's marquee carbon-trading program. But it's in-state Democrats who are taking aim at the state's other emissions market for transportation fuels.
Credit prices in California's low-carbon fuels market dropped $4 per ton Tuesday morning on the recognition of a credible threat in SB 237, a bill introduced overnight that would cap prices instead of letting them rise as planned in service of encouraging refiners to sell more biofuels, electricity and other non-fossil fuels.
This isn't some potshot from marginalized Republicans — it's a gut-and-amend bill from seven Democratic senators during the thick of the legislative session, blessed by Senate President Pro Tem Mike McGuire.
'This critical legislation will reduce costs for drivers across the Golden State while continuing to move our climate and energy goals full steam ahead,' McGuire said in a statement.
And it's not all moderate Democrats, either — besides Sens. Tim Grayson, Anna Caballero and Melissa Hurtado, Sen. Jesse Arreguín, a former Berkeley mayor, is signed on, as is Sen. Jerry McNerney, a freshman and eight-term U.S. House member who was known for being Congress' 'science guy."
The bill is a grab bag of measures to address gas prices, along the lines of another sprawling affordability bill this session, Sen. Josh Becker's SB 254. In addition to capping credit prices at roughly $75 per ton, with increases pegged to inflation, it would also push state officials to ditch California's unique, lower-emission gasoline blend in favor of a broader, West-wide standard. It would also offer refiners a 'one-stop shop' for environmental permitting and impose more state oversight of any future rules that affect retail fuel prices.
The bill is already triggering some odd-bedfellows alliances. The petroleum industry's main trade group, the Western States Petroleum Association, supports it — but so do environmental justice advocates who have long opposed the fuel market's incentives for dairy farms that capture their methane emissions and sell it for electricity. So does at least one sitting member of the state agency that put the policy in place.
'This isn't a surrender,' said Dean Florez, a member of the California Air Resources Board and a former state lawmaker from Bakersfield. 'It's a reality check. When credit prices spike so high they quietly tack 85 cents onto a gallon of gas, people stop believing that the green future includes them.'
But other environmentalists are concerned about losing another climate policy in the state's toolbox, right after Trump revoked the state's permission to enforce its nation-leading electric vehicle targets.
'Why would we handcuff ourselves by not using a key policy to address transportation, the single largest emitting sector in California?' asked Katelyn Roedner Sutter, California director for the Environmental Defense Fund.
For Gov. Gavin Newsom — who's beat up on oil companies but then instructed his California Energy Commission to try to keep refiners from leaving after two of them subsequently announced departure plans — the bill could cut both ways. (Newsom's office didn't immediately respond to a request for comment.)
It puts a spotlight on the state's perpetually high gas prices and reopens a wound from last year, when lawmakers hit CARB over its admission and subsequent walkback of its estimate that the program could raise gas prices by 47 cents per gallon.
But it could also help close another wound from last year, when neighboring governors whose states depend on California gas publicly complained about Newsom's bill to have refiners keep more supplies on hand in the event of outages.
There's surprisingly wide agreement that California's custom blend of gasoline, formulated to reduce smog in the summer, might not need to be so uniquely tailored.
Dan Sperling, a former CARB board member and director of the University of California, Davis' Institute for Transportation Studies, said broadening the market to align with the fuel used in other Western states would bring down prices and reduce the impact of refinery closures, while having minimal effect on emissions.
'If you can make some minor modifications and open up the market to more refiners outside California, then the concern about refiners leaving goes away,' he said.
Grayson acknowledged things could change. 'Details of the policy are up for negotiation, but I will be fighting to ensure that we get needed change for Californians who are fed up with our fuel economy,' he said in a statement.
But the mere fact of the bill is already juicing conversations about how it could interact with the ongoing negotiations to reauthorize the state's other carbon price, its cap-and-trade program. Environmental justice advocates are hoping it will count as a win for industry and moderate Democrats so they'll soften their opposition to proposed cap-and-trade changes like eliminating offsets.
'It's not really benefiting us and it is costing us, and we'd rather see that [price] go down than cap and trade go down,' said Katie Valenzuela, a consultant for environmental justice groups. — DK, AN, CvK
Did someone forward you this newsletter? Sign up here!
SPEAKING OF CARBON MARKETS: Global carbon trading markets and tax policies are quickly expanding, thanks in large part to China.
China, the world's largest greenhouse gas emitter, has recently extended its emissions-limiting program beyond the power sector to cover cement, steel and aluminum production. That move means that 40 percent of global industrial emissions are now taxed or regulated by carbon markets, according to a new World Bank report.
Carbon markets are expected to see continued growth as Brazil, India and Turkey plan to add their own programs, Anne C. Mulkern reports for POLITICO's E&E News.
The quality of those carbon markets, however, is questionable, according to Danny Cullenward, a carbon market economist at the Kleinman Center for Energy Policy and vice-chair of CARB's own Independent Emissions Market Advisory Committee.
'There are a lot of markets with low prices,' he said. 'There are very few programs that have a substantial impact in terms of either having a meaningful carbon price or contributing meaningfully to emission reductions.' — AN
JUST SIGN HERE: Legislative leaders and Newsom decided to compromise on funding Cal Fire as part of their overall budget agreement released on Tuesday.
Newsom had wanted to spend $1.5 billion of the revenues from the state's cap-and-trade program on backfilling a general fund cut to Cal Fire amid a wider state deficit; state lawmakers wanted to reduce that to only $500 million, arguing Cal Fire is too essential to be funded with sometimes fickle cap-and-trade revenues. Ultimately, they agreed to $1 billion.
Still largely unresolved: Sen. Scott Wiener's proposal to exempt many types of urban housing projects from environmental review. Lawmakers are expected to fill in the details and take up the proposal later this week. — CvK
MOSTLY GOOD NEWS ON GROUNDWATER: California's groundwater grew by 2.2 million acre-feet over the 2024 water year — about equivalent to half the storage capacity at Shasta Lake, the largest aboveground reservoir in the state.
The new numbers come from the Department of Water Resources' semi-annual groundwater report published Tuesday.
State water officials attribute the growth to two major reasons: First, California had about average precipitation levels over the 12 months from October 2023 to October 2024, avoiding the pressures of drought for a second year in a row. Second, farmers and local water officials have increased their efforts to send water underground and slow overpumping to meet a milestone law requiring groundwater levels to stabilize by 2040, the Sustainable Groundwater Management Act.
For only the second time since the state started counting, more wells last fall had increases in their water levels over the past ten years than decreases (the first time was in the spring of 2024.)
To be sure, California isn't out of the woods on groundwater yet. Farmers and individuals used 11.7 million acre-feet of groundwater last year to meet roughly 40 percent of the state's overall needs — far more than they used during the exceptionally wet 2023 water year, which saw groundwater grow by four times as much as in 2024, but far less than what they usually use during drought years.
The first half of 2025 has been drier, especially in the southern part of the state where overpumping is most critical and still causing land subsidence. — CvK
HEAT'S ON: A new dashboard launched Tuesday by the Latino Policy and Politics Institute at UCLA shows just how much more Latino neighborhoods face extreme heat and air pollution than their non-Latino White counterparts — and suffer worse health outcomes as a result, writes Chelsea Harvey of POLITICO's E&E News.
In Los Angeles County, for instance, 25 percent of workers in Latino neighborhoods are employed in heat-exposed industries, such as agriculture or construction. That's compared with just 8 percent of workers in non-Latino White neighborhoods.
And 13 percent of adults in Latino neighborhoods in Los Angeles County live with diabetes, compared with 8 percent of adults in non-Latino White neighborhoods. Adults with diabetes are at greater risk of complications from exposure to extreme heat.
— California politicians harbor an implicit belief that producing movies is more important than producing food, opines Dan Walters in CalMatters.
— Catherine Reheis-Boyd, departing CEO and President of the Western States Petroleum Association, does an exit interview with VerdeXchange News after 45 years in the industry.
— Trump's bid to repeal the 'roadless rule' protecting national forests has a long road ahead indeed.
