After months of negotiation, California legislative leaders on Wednesday reached an eleventh-hour agreement on a suite of closely watched climate and energy bills.
Gov. Gavin Newsom, state Senate President Pro Tempore Mike McGuire (D-Healdsburg) and Assembly Speaker Robert Rivas (D-Hollister) announced the deal just days before the the legislative session ends on Friday. It includes reauthorization of California’s signature cap-and-trade program and the expansion of a regional electricity market, among other items.
“After months of hard work with the Legislature, we have agreed to historic reforms that will save money on your electric bills, stabilize gas supply, and slash toxic air pollution — all while fast-tracking California’s transition to a clean, green job-creating economy,” Newsom said in a statement.
There were wins and losses for energy and environmental groups in the package, which is expected to pass by the end of the week before moving to Newsom’s desk for his signature.
Among the most prominent items is the extension of California’s nation-leading cap-and-trade program beyond its 2030 expiration date to 2045. The program sets limits on greenhouse gas emissions and allows large polluters to buy and sell unused emission allowances at quarterly auctions.
Cap-and-trade is seen as crucial for California to comply with its climate goals — including reaching carbon neutrality by 2045 — and also brings in billions in revenue that helps fund state climate efforts such as the high-speed rail and safe drinking water programs. Newsom for months had been pushing for the program to be reauthorized largely in its current form, while environmental groups were hoping to see changes in how the program is run and where the money is spent.
Revised language released Wednesday, including Senate Bill 840 and Assembly Bill 1207, includes some but not all of the changes they had hoped for, such as prioritized funding for nature-based climate solutions and a proposal to provide direct consumer rebates from the California Climate Mitigation Fund to help address affordability concerns.
“By aligning the future of cap-and-trade with the timeline of California’s ambitious emission reduction targets, California is positioned to achieve its climate goals in the most cost-effective way possible,” said Katelyn Roedner Sutter, California state director with the nonprofit Environmental Defend, who urged lawmakers to pass the bill.
But there are also “missed opportunities,” according to the nonprofit group the Climate Center, including the preservation of free allowances for the oil and gas industry — permits to pollute so that businesses are not at a disadvantage against competitors in other states.
“Overall, this proposal is better than a straight reauthorization of the cap-and-trade program, but not by much,” said Ryan Schleeter, the Climate Center’s communications director. “It leaves billions of dollars on the table that could have supported climate solutions and addressed the state’s affordability challenges. California has a lot more work to do to shift the financial burden of the climate crisis from taxpayers to the wealthy, polluting corporations responsible.”
Also included in the package was AB 825, which creates a pathway for California to participate in a regional electricity market. If passed, the bill would expand partnership with other Western states to buy and sell more clean power in a move supporters say will improve grid reliability and save money for ratepayers.
“This historic agreement puts California on a pathway with Western states to provide cleaner, cheaper, more reliable energy,” Rivas said in a statement. “It’s a landmark affordability agreement that will amount to billions of dollars in savings for Californians.”
Some supporters have argued that improved collaboration across the West will help accelerate climate progress, while opponents fear that California would yield control of its power grid to out-of-state authorities, including the federal government.
“It’s just going to be disastrous for California,” said Loretta Lynch, former president of the California Public Utilities Commission. Among other concerns, Lynch said the bill would eliminate all statutory requirements that the California Independent System Operator, run its electricity market consistent with the state’s public health and environmental laws, and would weaken the state’s ability to withdraw from the regional plan if problems arise.
Other groups said the language released Wednesday addresses many concerns and helps protect California’s interests.
“This proposal clears the way to stand up energy markets that can save Californians real money,” Alex Jackson, director of the nonprofit American Clean Power California, said in a statement. “It means we can work with our neighbors to ensure the West has the affordable, reliable, clean power needed to meet surging demand.”
Also included in Wednesday’s package was SB 352, which would establish an air pollution monitoring program in some of the state’s most heavily polluted communities, and SB 254, which would replenish the state’s wildfire liability fund to help cover wildfire damage and finance mitigation efforts, among other items.
“This bold legislative package will deliver for every corner of the Golden State on energy affordability and wildfire prevention, expand clean drinking water to tens of thousands and it also cements historic agreements on California’s signature climate policies,” McGuire said in a statement.
However, some advocacy groups were upset by what wasn’t included in the package — including “fixes” to the state’s overhaul of the California Environmental Quality Act. That overhaul eases new construction in the state. Meanwhile, another bill supported by many environmental groups that would have created a Climate Superfund to hold fossil fuel companies liable for damage caused by their emissions was pushed to next year.
Perhaps most controversial in the package is SB 237, a bill that could help increase the state’s oil production in what lawmakers say is an effort to stabilize the market and gird against future gasoline price spikes. It follows major announcements this year from the oil companies Phillips 66 and Valero that they were shutting down two big refineries in the state.
In something of a compromise, the bill would streamline environmental approvals for new oil wells in Kern County but make it more difficult for companies to get approval to drill off the coast.
In a statement, the activist group Campaign for a Safe and Healthy California expressed concern about the legislation, which it said was “crammed in the Legislature’s last 72 hours,” and urged lawmakers to reject the proposal.
“The transition from oil is well underway in California and across the world, with refineries closing from Texas to Los Angeles,” the statement said. “But in California, Big Oil is using the threat of refinery closures as a bargaining chip to pressure lawmakers into approving more drilling.”
The governor’s office told The Times that Newsom “looks forward” to signing the legislation when it reaches his desk.
Times staff writers Laura Nelson and Melody Petersen contributed to this report.