Newsom wants to step up climate fight as wildfires rage. But will Californians pay up?
When Gov. Gavin Newsom declared recently that “we have to step up our game” and accelerate California’s fight against climate change, it triggered a question in Chris Rufer’s mind:
How much will this cost?
Rufer is the founder of The Morning Star Co. of Woodland, one of the world’s largest tomato processors. Under California’s climate-change initiative known as cap-and-trade, Morning Star has to spend about $2 million a year buying carbon emission credits — the right to spew greenhouse gases at its processing plants in Williams, Los Banos and Santa Nella.
If California raised the price of carbon credits, it would mean higher production costs — and price hikes for consumers of tomato paste, diced tomatoes and other Morning Star goods. The state could “make it so bad that we have to decrease production,” said Rufer, who once filed an unsuccessful lawsuit against the cap-and-trade program.
Rufer’s reaction underscores the challenges that Newsom faces as he ramps up an array of new climate-change initiatives for California, as a rampage of wildfires never before seen in modern times overtakes the state.
Fighting climate change costs money. Companies like Morning Star pay billions of dollars a year for emissions credits. Motorists spend an estimated 30 cents a gallon extra at the pump because of restrictions on greenhouse gases.
Are they willing to spend any more?
Newsom hasn’t yet detailed what he wants to do. But a higher price on carbon could create “political liabilities” for Newsom in a state mired in a difficult recession because of the COVID-19 economic shutdown, said Chris Busch, research director at Energy Innovation LLC, a San Francisco policy and research firm.
Polls show Californians overwhelmingly favor the state’s climate initiatives; more than three-quarters of them want the state to take a leadership role on the world stage, according to a July survey by the Public Policy Institute of California.
But when it comes to paying for a green California, the results are mixed. Only about half are willing to pay more for electricity to reduce global warming, for instance. Californians pay about 50% more than the average American for each kilowatt-hour of electricity they use. But their monthly bills are actually 13% below the average because usage is so low.
“Californians want a free lunch but there is no free lunch on climate change,” said Steve Maviglio, a Democratic political consultant in Sacramento. “It is an expensive issue to tackle. … In this economy, I don’t think people are willing to shell out more.”
Still, Newsom is coming under pressure from some in the environmental community to go bold on a variety of fronts. For instance, the state estimates that 8% of all new vehicle sales in 2025 will be electric or plug-in hybrids. A trio of groups — the Sierra Club, Earthjustice and the California Environmental Justice Alliance — is urging Newsom to make it 100% by 2030.
Wade Crowfoot, secretary of the Natural Resources Agency, said in an interview that the Newsom administration realizes that the recession could complicate the state’s efforts.
“We need to balance climate action with economic recovery,” said Crowfoot, who made national headlines after engaging in an impromptu debate on global warming with President Donald Trump during Trump’s recent visit to Sacramento. “We have to be careful about the actions that we take.”
Clean energy, climate and rolling blackouts
California’s goals on climate change sometimes collide with essential tasks like keeping the lights on.
The state endured two nights of rolling blackouts during a mid-August heat wave. The Independent System Operator, which runs the electricity grid, said the blackouts were caused by planning miscues.
But it’s also true that the state’s heavy reliance on renewable energy played a role. Solar power naturally faded out as the sun went down, and wind power proved fickle, leaving the state’s electricity grid short of power both nights.
California gets about 34% of its power from renewables, and the figure is climbing. A law signed by Newsom’s predecessor, Jerry Brown, says renewables must make up 50% of the power supply by December 2026 and 100% by 2045.
Newsom wants to speed that up.
“While it’s nice to have goals to get to 100% clean energy by 2045 … we’re going to have to be more aggressive,” he said while touring forests burned by the deadly West Zone of the North Complex Fire. “I think 2045’s too late.”
But Newsom doesn’t want to see the lights go out, either. The governor said he was pleased that the State Water Resources Control Board — citing the need for reliable energy — postponed the planned shutdown of a string of high-polluting, natural gas-fired power plants on the Southern California oceanfront.
Newsom called the postponement “a small step back … negligible in the context of our total, overall strategy” of increasing the use of renewable electricity sources.
PG&E Corp., the state’s largest utility, says it supports the overall policy of removing carbon from the power grid, but it sounded a cautionary note about speeding up the process.
“As we work towards higher renewables mandates, we also must also remain focused on maintaining grid reliability and managing costs for customers,” said Pacific Gas and Electric Co. spokeswoman Lynsey Paulo. “Ultimately, for the low-carbon economy to be sustainable, we must get there as cost-effectively as possible and we must ensure that the electric system continues to be safe and reliable.”
Newsom: California climate effort ‘adequate’
It was a historic moment in the White House Rose Garden. A contingent of top California officials, led by then-Gov. Arnold Schwarzenegger, were meeting with President Barack Obama and executives from the nation’s automakers. The May 19, 2009, ceremony was held to celebrate a breakthrough agreement that would ratchet down greenhouse gas emissions from automobiles.
“I want to applaud California and Governor Schwarzenegger and the entire California delegation for their extraordinary leadership,” Obama said. “They have led the way on this as they have in so many other efforts to protect our environment.”
The state has launched other initiatives on climate change. The cap-and-trade program requires industrial firms to buy emissions credits to release carbon into the air.
The “low carbon fuel standard” imposes restrictions on how much carbon can be emitted when refiners turn oil into gasoline. The renewable portfolio standard requires electric utilities to use solar and other renewables in ever-increasing amounts, leading to the current target of a 100% green grid by 2045.
The results: a decline in greenhouse gases throughout the state. In 2004, carbon emissions in California were estimated at 493.9 million metric tons, according to the California Air Resources Board. In 2017, the latest figures available, they’d fallen to 424.1 million, a drop of 14%.
Newsom has taken steps of his own since taking office in January 2019. He’s engaged in a protracted legal fight to protect the greenhouse-gas rules on cars against the Trump administration, which has been trying to weaken them.
He formed an alliance with a group of five automakers that have agreed to play by California’s rules — and even signed an executive order last fall requiring state agencies to buy vehicles only from those manufacturers. (The carmakers are Ford, Honda, Volkswagen, BMW and Volvo). He also told state agencies to stop buying gas-powered sedans, although the order exempts public safety vehicles.
But from where Newsom was standing recently — in a smoldering forest near Lake Oroville, a few miles from the site of a wildfire that killed 15 people — those efforts aren’t good enough.
While the governor said he was proud of California’s efforts on climate change, his overall verdict was dismissive: “Everything we’ve done has been adequate.”
No other state fights climate change as aggressively as California. What else can the state do?
Newsom declined to go into specifics, other than to say he’s asked Crowfoot and Jared Blumenfeld, secretary of Cal EPA, to comb through the state’s policies and regulations to see what could be put on a faster track.
Crowfoot said that the process will take a while. While the governor believes he can take some actions through executive orders, other changes would “absolutely involve the Legislature,” Crowfoot said.
One possibility for change, Newsom suggested in his visit to Oroville, could involve cap-and-trade.
The eight-year-old program relies on a market mechanism to put a price on a ton of carbon emissions. Big industrial companies are required to reduce their emissions below a certain threshold — the “cap” — which declines slightly each year. If they can’t find a way to reduce emissions, they have to buy credits, either from other companies — the “trade” — or at auctions run every three months by the California Air Resources Board.
Last year alone the auctions raised more than $5 billion, although that figure includes money spent by companies in the Canadian province of Quebec. California spends its share of the proceeds on a variety of climate programs, including energy-efficient housing projects and efforts to reduce wildfire risks by “thinning” overgrown forests. Some of the money is used to support the multibillion-dollar high-speed rail project.
Some experts believe the program could be strengthened by making fewer credits available for purchase.
At the latest state-run auction, credits sold for less than $17 per ton — the minimum price allowed by the state, according to UC Berkeley energy economist Severin Borenstein.
With prices that low, the program doesn’t really discourage carbon emissions as much as it could, said Busch, of Energy Innovation.
“There’s a buildup of excess permits and that’s putting downward pressure on the price,” said Busch, whose firm is funded by donors such as the Aspen Global Change Institute, an environmental nonprofit. “That undermines the effectiveness.”
Nevertheless, Busch said political resistance might make it hard to clamp down severely on the supply of carbon credits.
“It’s a tough call in times like these,” he said.
Paying more for gas to protect the climate
They might not realize it, but California motorists pay at the pump for the privilege of emitting carbon.
Since 2015, wholesale fuel distributors have been required to participate in the cap-and-trade program. The costs likely add another 15 cents a gallon at retail, said UC Berkeley energy economist Severin Borenstein.
The state’s low carbon fuel standard also adds about 15 cents a gallon to fuel prices, Borenstein said. The low carbon fuel standard is a separate program that charges oil refiners, and makers of ethanol and other biofuels, for the carbon they emit during the process of making fuels.
The total cost to motorists, about 30 cents, is part of the reason for California’s high gasoline prices. Californians pay an average of $3.23 a gallon, second only to Hawaii and well above the national average of $2.18, according to AAA.
And the oil industry says charging Californians more for gas, in order to fight global warming, would harm the economy.
“We’ve got fires destroying people’s homes, they’re losing jobs because of COVID,” said Catherine Reheis-Boyd, president of the Western States Petroleum Association. “Really, we’re going to talk about raising the cost of living to families in California?”
Some environmental groups have been pushing Newsom to ban fracking, the controversial oil-production technology, or take other steps to reduce the footprint of the oil industry in California. They’ve also complained that he’s done little to rein in the state’s oil industry, which is mostly centered in the area around Bakersfield.
The Sierra Club and other environmental groups called on Newsom on Friday to “stop permitting new oil and gas drilling, pipelines and infrastructure, and accelerate a managed decline to phase out oil production and refining in California, starting with operations near homes and schools.”
Reheis-Boyd said “we get the urgency” of global warming but the state can’t simply clamp down on oil and gas production.
“We can’t destabilize our economy with frantic energy policies,” Reheis-Boyd said. “When you (adopt) rushed policies that stop oil and gas production, you put people out of work.”
Newsom and his supporters, though, argue that fighting climate change is good for the economy. The governor said solar and other clean industries employ five times as many Californians as the state’s oil and gas industry.
The economics play out another way. Newsom said the alternative to fighting climate change is to pay for its consequences. He noted that the cleanup of the debris from the 2018 Camp Fire, which leveled the town of Paradise, cost about $2 billion, much of it paid by the federal government.
“The biggest cost is in our neglect,” he said.
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