California won't immediately change pollution credit program

Full Screen
1 / 4

Copyright 2019 The Associated Press. All rights reserved

FILE - California EPA Director Jared Blumenfeld talks to reporters in Sacramento, Calif., Tuesday, Aug. 13, 2019. Blumenfeld testified before a legislative committee on Feb. 23, 2022, about the state's cap and trade program. (AP Photo/Rich Pedroncelli, File)

SACRAMENTO, Calif. – Newsom administration officials said Wednesday they're in no rush to make changes to one of California's key climate change programs despite concerns it won't be able to meet its goals for reducing greenhouse gas emissions.

The program in question — called cap and trade — requires companies like oil refineries that emit carbon to buy allowances equivalent to what they plan to emit. Over time, fewer allowances are made available with the goal of spurring companies to pollute less.

Recommended Videos

But a recent report by a panel that advises state lawmakers found companies have saved up so many pollution credits — 321 million — for later use that it could make the program ineffective. The report's authors, environmental advocates and some lawmakers have urged the California Air Resources Board to do a thorough analysis of the risks posed by the saved allowances.

But Jared Blumenfeld, secretary of the California Environmental Protection Agency, said Wednesday that likely won’t happen until the end of 2023.

“We’re looking at this with the attention that I think it deserves,” he said. But, he added, “we won’t be taking urgent action to simply change things.”

Advocated of cap and trade say such market-based climate programs encourage companies to adopt cost-effective emissions reductions. But opponents say cap and trade simply allows companies to keep polluting with little relief for neighboring communities.

California's program launched in 2013 and was set to expire in 2020. But lawmakers extended it through 2030 five years ago, with some changes, including reducing the total allowances that would be sold in future auctions.

Some lawmakers wanted the air board to eliminate all unused allowances, requiring companies to start fresh rather than relying on cheaper allowances they bought in the past. But that didn't happen. Instead, the state said any allowances that don't sell for 24 months will be removed from the auction pool.

Neither the state nor experts who study the market say they know exactly how big the allowance bank can be without causing problems. But the air board has only previously measured the possibility of a bank of about 150 million credits — less than half the amount that exists today.

Any changes to the amount of allowances available in the market would need to go through a regulatory process or be directed by the Legislature. Several participants in Wednesday's hearing raised concerns that waiting until 2023 to analyze the risks of the allowance bank could delay changes to the program until at least the middle of the decade.

“Waiting until the middle of the 2020s could make it more difficult for the state to make adjustments in time to meet its 2030 goals," warned Ross Brown of the Legislative Analyst's Office, which advises lawmakers on fiscal and policy issues.

California has set a requirement to reduce statewide greenhouse gas emissions 40% below 1990 levels by 2030. Previous estimates from 2017 said more than a third of those reductions would need to come from cap and trade.

Cap-and-trade's role is likely to be diminished in the new “scoping plan" that the air board is writing, which lays out a roadmap for how the state will meet its climate goals.

Blumenfeld, the EPA secretary, said an analysis of the saved allowances can't happen until after that plan is complete. State Sen. Bob Wieckowski, who chaired the legislative hearing, noted that people have been raising concerns about the amount of saved credits for years and that the issue isn't new.

“You don’t have any concern that you might be waiting too long?" he asked.

Liane Randolph, chairwoman of the air board, said the state needed more time to see how recent changes to the program are working. She also suggested that the scoping plan may assume cap-and-trade will be extended beyond 2030, though there have been no legislative efforts to do so.

Recommended Videos