California air regulators updated the rules of a key climate program on Friday, a move widely protested by environmental groups who said the changes would weaken the program and undercut efforts to curb planet-warming emissions. The oil industry, meanwhile, said the program would still hinder efforts to bring down energy costs in the notoriously expensive state.
Under the changes approved Friday, the state will now give away up to roughly $3.5 billion worth of allowances to companies — mostly manufacturers and oil refiners — for free if they build projects that help them reduce emissions. State regulators said it is designed to ensure major businesses don’t leave the state, but environmentalists say it runs counter to the purpose of the program, which is aimed at incentivizing companies to reduce pollution so they can spend less on allowances. They also say it will mean there is less money to put toward programs designed to mitigate or reduce the impact of climate change.
California Air Resources Board Chair Lauren Sanchez said the changes will allow the state to remain a climate leader. “Moving forward shows that we can be responsive to affordability concerns, new legislative direction, while also setting a clear signal for Californians, other states and global partners that we remain committed to driving long-term investments in clean energy jobs and reducing pollution in communities,” she said.
The newly approved updates also increase funding from allowance sales by $2 billion from 2027 through 2030 for a program providing utility bill credits to Californians and set aside about $800 million to help businesses participating in cap and trade limit the program’s costs on Californians. Before the changes, about $4 billion the state received annually from allowance sales helped pay for climate-change mitigation, affordable housing and transportation projects through a pot of money called the Greenhouse Gas Reduction Fund.
The updates will likely halve annual revenues for the fund, according to the nonpartisan Legislative Analyst's Office. That is largely because of the new incentive program for manufacturers and refiners, said Danny Cullenward, a climate economist who is critical of the changes, though board staff disagrees with that.
