ARTICLE
Another interesting thing popped up in my research about the California v. Texas debate. This new item has jumped into the environmental conversation about how California is meeting our Climate Change goals. Now a Texas oil company is set up to play a significant role in the process. Occidental Petroleum is seeking to sell credits in California’s transportation carbon market (Cap and Trade) to help finance the construction of what would be the world’s largest industrial carbon dioxide removal plant. So what is the California system that provides for this to happen? California runs one of the world’s largest carbon markets, known as “cap-and-trade,” which requires companies to buy, trade or receive pollution “allowances” equivalent to how much they plan to emit. The state makes fewer allowances available over time, with the goal of spurring the companies to pollute less as allowances become scarcer and more expensive. The Cap-and-Trade Program is a key element of California’s strategy to reduce greenhouse gas (GHG) emissions. It complements other measures to ensure that California cost-effectively meets its goals for GHG emissions reductions. The Cap-and-Trade Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. The Program applies to emissions that cover approximately 80 percent of the State’s GHG emissions. CARB creates allowances equal to the total amount of permissible emissions (i.e., the “cap”). One allowance equals one metric ton of carbon dioxide equivalent emissions (using the 100-year global warming potential). Each year, fewer allowances are created and the annual cap declines. An increasing annual auction reserve (or floor) price for allowances and the reduction in annual allowances creates a steady and sustained carbon price signal to prompt action to reduce GHG emissions. All covered entities in the Cap-and-Trade Program are still subject to existing air quality permit limits for criteria and toxic air pollutants. Now, back to Occidental’s plan. The operation would effectively reverse what Occidental has done for a century, by taking carbon out of the air and sending it underground, even if on a relatively small scale. But there’s a twist. Occidental has said it plans to use some or most of the carbon dioxide it captures from the Texas plant to squeeze more petroleum out of the ground, by pumping it into aging oil fields. As a result, the California carbon market, which is meant to help lower the climate emissions of transportation in the state, could supply tens of millions of dollars to help extract more oil, thereby contributing more emissions. Occidental’s plans raise one of environmental advocates’ biggest concerns about carbon removal technologies: that they will be used by oil companies to delay the far more urgent task of rapidly transitioning away from fossil fuels. By allowing companies to sell credits for captured carbon dioxide used to produce oil, some advocates warn, California’s program is poised to do just that. People familiar with Occidental’s plans say that accessing California’s transportation market is critical to financing the “direct air capture” plant, which the company has said would cost up to $1 billion and would initially pull half-a-million metric tons of the greenhouse gas out of the air every year. Occidental says it will break ground this year in West Texas, near Odessa. If the project is completed as planned, it would mark a quantum leap for a technology that some scientists and advocates say could play an important role in meeting climate targets. Pressed by a rage of climate disasters, regional and national governments across the globe are rushing to support carbon removal technologies. The bipartisan infrastructure bill that Congress passed last year included $3.5 billion to build direct air capture “hubs.” Meanwhile, New York and Washington, the European Union and others have enacted or are considering a range of possible incentives, from clean-fuel policies like California’s to government procurement programs for carbon dioxide removal. But environmental advocates say that many of the policies that are emerging, including California’s clean fuels market and a federal carbon capture tax credit, have been shaped by oil companies to their own advantage, diluting the climate benefits. You can read the full story here: https://www.kqed.org/science/1979033/slick-business-texas-oil-company-wants-to-use-california-clean-energy-credits-to-extract-more-oil So where does this put California and specifically Governor Newsom’s mandated plan that all vehicles in California will be fossil-free by 2035? You may recall back in September 2020, Governor Gavin Newsom announced that he would aggressively move the state further away from its reliance on climate change-causing fossil fuels while retaining and creating jobs and spurring economic growth He issued an executive order requiring sales of all new passenger vehicles to be zero-emission by 2035 and additional measures to eliminate harmful emissions from the transportation sector. The transportation sector is responsible for more than half of all of California’s carbon pollution, 80 percent of smog-forming pollution and 95 percent of toxic diesel emissions — all while communities in the Los Angeles Basin and Central Valley see some of the dirtiest and most toxic air in the country. “This is the most impactful step our state can take to fight climate change,” said Governor Newsom. “For too many decades, we have allowed cars to pollute the air that our children and families breathe. Californians shouldn’t have to worry if our cars are giving our kids asthma. Our cars shouldn’t make wildfires worse — and create more days filled with smoky air. Cars shouldn’t melt glaciers or raise sea levels threatening our cherished beaches and coastlines.” The very same state agency, California Air Resources Board, that is charged with developing regulations that 100% of in-state sales of new passenger cars and trucks will be zero-emission by 2035, is also the lead agency implementing the Cap and Trade program. It is hard not to imagine that an agency focused on reducing GHG would be in the business of selling carbon credits to one of the world’s leading oil-producing companies. This seems to be the standard practice for governments to regulate polluting industries with a stick and candy approach. California launched the program in 2013 and originally set it to expire in 2020. But in 2017, lawmakers and then-Gov. Jerry Brown extended it through 2030. Environmental justice advocates have long argued against it, saying it does little to improve air quality for people who live next to large polluters. CARB does not make public who holds banked allowances, and there is a limit on how many an individual emitter may possess. If the program expires in 2030 as planned, companies would no longer need to pay to pollute and any outstanding allowances would be useless. So the 2035 magic deadline is a marker that must include the efforts of the Cap and Trade program to continue to reduce emissions beyond 2030. Let’s see where CARB moves in the coming months as it prepares a new analysis and “scoping plan.” Stay tuned.
Another interesting thing popped up in my research about the California v. Texas debate. This new item has jumped into the environmental conversation about how California is meeting our Climate Change goals. Now a Texas oil company is set up to play a significant role in the process. Occidental Petroleum is seeking to sell credits in California’s transportation carbon market (Cap and Trade) to help finance the construction of what would be the world’s largest industrial carbon dioxide removal plant.
So what is the California system that provides for this to happen? California runs one of the world’s largest carbon markets, known as “cap-and-trade,” which requires companies to buy, trade or receive pollution “allowances” equivalent to how much they plan to emit. The state makes fewer allowances available over time, with the goal of spurring the companies to pollute less as allowances become scarcer and more expensive.
The Cap-and-Trade Program is a key element of California’s strategy to reduce greenhouse gas (GHG) emissions. It complements other measures to ensure that California cost-effectively meets its goals for GHG emissions reductions. The Cap-and-Trade Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. The Program applies to emissions that cover approximately 80 percent of the State’s GHG emissions. CARB creates allowances equal to the total amount of permissible emissions (i.e., the “cap”).
One allowance equals one metric ton of carbon dioxide equivalent emissions (using the 100-year global warming potential). Each year, fewer allowances are created and the annual cap declines. An increasing annual auction reserve (or floor) price for allowances and the reduction in annual allowances creates a steady and sustained carbon price signal to prompt action to reduce GHG emissions. All covered entities in the Cap-and-Trade Program are still subject to existing air quality permit limits for criteria and toxic air pollutants.
Now, back to Occidental’s plan. The operation would effectively reverse what Occidental has done for a century, by taking carbon out of the air and sending it underground, even if on a relatively small scale.
But there’s a twist. Occidental has said it plans to use some or most of the carbon dioxide it captures from the Texas plant to squeeze more petroleum out of the ground, by pumping it into aging oil fields. As a result, the California carbon market, which is meant to help lower the climate emissions of transportation in the state, could supply tens of millions of dollars to help extract more oil, thereby contributing more emissions.
Occidental’s plans raise one of environmental advocates’ biggest concerns about carbon removal technologies: that they will be used by oil companies to delay the far more urgent task of rapidly transitioning away from fossil fuels. By allowing companies to sell credits for captured carbon dioxide used to produce oil, some advocates warn, California’s program is poised to do just that.
People familiar with Occidental’s plans say that accessing California’s transportation market is critical to financing the “direct air capture” plant, which the company has said would cost up to $1 billion and would initially pull half-a-million metric tons of the greenhouse gas out of the air every year.
Occidental says it will break ground this year in West Texas, near Odessa. If the project is completed as planned, it would mark a quantum leap for a technology that some scientists and advocates say could play an important role in meeting climate targets.
Pressed by a rage of climate disasters, regional and national governments across the globe are rushing to support carbon removal technologies. The bipartisan infrastructure bill that Congress passed last year included $3.5 billion to build direct air capture “hubs.” Meanwhile, New York and Washington, the European Union and others have enacted or are considering a range of possible incentives, from clean-fuel policies like California’s to government procurement programs for carbon dioxide removal. But environmental advocates say that many of the policies that are emerging, including California’s clean fuels market and a federal carbon capture tax credit, have been shaped by oil companies to their own advantage, diluting the climate benefits.
You can read the full story here: https://www.kqed.org/science/1979033/slick-business-texas-oil-company-wants-to-use-california-clean-energy-credits-to-extract-more-oil
So where does this put California and specifically Governor Newsom’s mandated plan that all vehicles in California will be fossil-free by 2035? You may recall back in September 2020, Governor Gavin Newsom announced that he would aggressively move the state further away from its reliance on climate change-causing fossil fuels while retaining and creating jobs and spurring economic growth He issued an executive order requiring sales of all new passenger vehicles to be zero-emission by 2035 and additional measures to eliminate harmful emissions from the transportation sector.
The transportation sector is responsible for more than half of all of California’s carbon pollution, 80 percent of smog-forming pollution and 95 percent of toxic diesel emissions — all while communities in the Los Angeles Basin and Central Valley see some of the dirtiest and most toxic air in the country. “This is the most impactful step our state can take to fight climate change,” said Governor Newsom. “For too many decades, we have allowed cars to pollute the air that our children and families breathe. Californians shouldn’t have to worry if our cars are giving our kids asthma. Our cars shouldn’t make wildfires worse — and create more days filled with smoky air. Cars shouldn’t melt glaciers or raise sea levels threatening our cherished beaches and coastlines.”
The very same state agency, California Air Resources Board, that is charged with developing regulations that 100% of in-state sales of new passenger cars and trucks will be zero-emission by 2035, is also the lead agency implementing the Cap and Trade program. It is hard not to imagine that an agency focused on reducing GHG would be in the business of selling carbon credits to one of the world’s leading oil-producing companies. This seems to be the standard practice for governments to regulate polluting industries with a stick and candy approach.
California launched the program in 2013 and originally set it to expire in 2020. But in 2017, lawmakers and then-Gov. Jerry Brown extended it through 2030. Environmental justice advocates have long argued against it, saying it does little to improve air quality for people who live next to large polluters. CARB does not make public who holds banked allowances, and there is a limit on how many an individual emitter may possess. If the program expires in 2030 as planned, companies would no longer need to pay to pollute and any outstanding allowances would be useless.
So the 2035 magic deadline is a marker that must include the efforts of the Cap and Trade program to continue to reduce emissions beyond 2030. Let’s see where CARB moves in the coming months as it prepares a new analysis and “scoping plan.” Stay tuned.