Five Things to Know About California's Historic Step to Limit Carbon Pollution from Transportation Fuels

On January 1, fuel providers will join other major pollution sources under California's cap-and-trade program to limit carbon pollution. The program is a key component of California's landmark clean energy law, the Global Warming Solutions Act of 2006 (AB 32), which requires the state to reduce emissions to 1990 levels by 2020.

Not surprisingly, the oil industry is fighting against its obligation to reduce its carbon pollution (through a dizzying array of "astroturf" allies), just as it has fought against other pollution standards like phasing out leaded gasoline. As Big Oil's rhetoric about a "hidden gas tax" rains down upon the New Year like leftover confetti, here are five things you need to know to set the record straight.

1. As the largest source of carbon emissions in California, the oil industry must do its fair share to help solve the problem

The transportation sector is the single-largest source of carbon emissions in California, at nearly 40 percent. The state's other major polluters (such as power plants and cement factories) have been under the cap for the last two years, since 2013. Like the state's electric utilities, which are on track to deliver a third of California's power from renewable sources by 2020, the oil industry needs to do its fair share to reduce carbon pollution.

Reducing pollution from the transportation sector is also critical to meeting California's air quality standards. Many Californians live close enough to a freeway or busy road that they may face an increased risk of asthma, cancer, and other health hazards from vehicle pollution. In fact, twice as many Californians die early deaths from the health impacts of vehicular pollution than from motor vehicle accidents every year. This can especially affect low-income communities and communities of color, which are often located in regions with poorer air quality and closer to pollution sources.

2. The oil industry is fighting the state's climate laws tooth-and-nail to maintain demand for and prevent competition with their products

By reducing dependence on gasoline, AB 32 threatens the market dominance of oil. That's because AB 32 policies are lowering demand for gasoline and diesel--through cars that drive farther on a gallon, from competition from cheaper fuels like clean electricity and advanced biofuels that are diversifying California's fuel mix, and by giving consumers more transportation choices that reduce the need to drive. All of these solutions help us save money at the pump and create a cleaner environment and better future for our kids.

But rather than investing in cleaner fuels or more efficient production and refining processes, the oil industry has invested in a front group-led marketing campaign to avoid being held accountable for its pollution. Since 2009, the oil industry has spent over $70 million on lobbying in California alone. Both Chevron and the Western States Petroleum Association (WSPA), the most prominent and well-funded oil industry organization in California, are among the top five largest spenders on lobbyists this year. WSPA was caught red-handed last month when a leaked internal presentation revealed a coordinated campaign to stomp out climate and clean energy progress in California, Oregon, and Washington by propping up over 15 front groups that purport to represent the views of concerned citizens and the broader business community.

3. AB 32 will reduce fuel bills for Californians

The oil industry claims that being held accountable for its pollution will impose dramatic costs on consumers. The truth is it is our dependence on petroleum-based fuels for nearly all of our transportation needs that is costly. California's annual fuel bill exceeds $85 billion, or more than $6,800 per household. While gas prices have tumbled recently due to the sharp decline in global crude oil prices, if history is any guide, the one thing we can say for certain is they won't stay that way. And that pattern of volatility leaves consumers exposed. When gas prices spike again, such as in the wake of the August 2012 fire at the Chevron Richmond refinery (which pushed prices up 30¢/gallon almost overnight), high demand and the lack of viable alternatives means everyday Californians, not oil companies, get burned.

AB 32 is changing that equation. By reducing our demand for oil and providing California drivers with more fuel choices, AB 32 is reducing consumer fuel costs--saving households on average $380 next year, and growing to an average of $850 in savings annually by 2020.

Average Household Fuel Savings from AB32 Clean Transportation Measures


But as long as the oil industry gets a free pass for its pollution, it enjoys an unfair market advantage. The cap-and-trade program corrects that imbalance by ensuring fossil fuel prices reflects their pollution costs and by providing clean alternatives a level playing field.

4. California will invest the oil industry's compliance costs into programs that improve public health, reduce pollution, and create jobs in the communities that need them most

By law, proceeds from the sales of pollution permits under the cap-and-trade program must be invested in programs that reduce pollution, improve public health, and ensure all Californians enjoy the benefits of clean energy. This fiscal year, the Legislature appropriated $832 million of these funds, with one-third going to benefit the state's most disadvantaged and burdened communities. The first $19.5 million was awarded to eight projects (five in disadvantaged communities) to support the construction and upgrade of facilities to keep more waste out of landfills through composting and recycling, which will create up to 158 construction jobs and up to 130 permanent jobs. Add that to the more than 430,000 jobs already putting Californians to work building the clean energy economy, with an additional 70,000 jobs planned during the coming year.

5. The oil industry has had eight years to plan for compliance

The oil industry has had eight years--as much time as it took to land a man on the moon--to prepare for being held to the same standard as California's other major emitters. Along the way, California voters have shown unwavering support for AB 32 and the need to break our dependence on fossil fuels, including a high-profile referendum in 2010 resulting in the defeat of Proposition 23 by a margin of more than two to one. According to a July 2014 PPIC poll, fully three-quarters of Californians support requiring oil companies to produce lower emissions fuels or pay pollution fees, as AB 32 requires.

About the Authors

Alex Jackson

Legal Director, California Climate Project, Energy & Transportation program

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