Newsom signs climate overhaul, extending cap and trade while boosting oil drilling

Gov. Gavin Newsom today signed a sweeping package of climate and energy policies to extend the cap-and-trade greenhouse gas emissions program, increase oil drilling and allow the state to create a Western regional electricity market.

The overhaul that Newsom and top lawmakers negotiated in the final days of the legislative session amid heavy lobbying last week reflects urgency in the Democratic Party to preserve its climate goals while simultaneously reining in the surging gas and energy costs that have threatened to drive voters to the right.

Lawmakers opened the session this year declaring a focus on making California more affordable, following a bruising national election for Democrats. The energy package was central to that goal, with progressives proposing to lower costs with industry regulations.

But after two years declaring special sessions targeting the oil and gas industry, Newsom began to warm up to them as oil refineries announced closures that could send gas prices soaring. As a result, one of the bills he signed Friday would boost domestic oil production in Kern County by approving a long-delayed environmental impact report for new wells.

“We have to effectively transition,” Newsom said at an event in San Francisco. “This is not an ideological endeavor. We’re in the practical application business. We’ve got to manifest our ideals and our goals. So this lays it out. But it lays it out without laying tracks over folks.”

The biggest part of the complex package he signed were bills to extend the state’s cap and trade program, which since 2013 has put a price tag on carbon emissions. The program caps the amount of greenhouse gases that polluting industries can emit, and to a limited extent allows companies that cut emissions to sell permits to other companies that pollute. The program raises money for many of the state’s climate programs.

The extension leaves the program largely the same, which disappointed environmental justice advocates who argued it has allowed oil and gas to continue polluting near low-income communities. In a nod to those concerns, Newsom also signed another bill in the package that creates a state fund to monitor pollution mitigation in disadvantaged communities.

He also signed two bills affecting the electricity grid. One would allow the state to create a Western regional energy market, allowing the state to trade more electricity with neighbors.

Proponents, including mainstream environmental groups, say the idea would lower prices by allowing California producers to sell excess clean energy during times the state doesn’t need it — when it’s sunny, but not hot, for example, while importing power during heat waves and other high-demand times.

The other bill aims to lower the cost of transmission infrastructure for customers by setting up a public financing system for building new power lines. It would also prevent some utilities’ wildfire mitigation costs from being passed on to customers, and replenish the state’s wildfire fund by $18 billion. The money, paid by shareholders and ratepayers over the next decade, is used to pay wildfire victims.

The package Newsom signed leaves one imminent concern unaddressed: upcoming refinery closures. Negotiations late in the legislative session to keep two Bay Area refineries open have so far failed to produce any deals.

Some Democrats simply didn’t want to give more to the oil industry, while others disagreed on how much support the state should provide, Assemblymember Lori Wilson, a Suisun City Democrat, told CalMatters last week. Wilson had been pushing for the state to support the Valero refinery in Benicia that is now set to close by the end of the year without a deal, costing the city its largest private employer.

Cayla Mihalovich is a California Local News fellow.

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.