Last month I wrote that California was and that it was mostly Gavin Newsom’s fault. I have given him and his appointees the duty of the Aliso Canyon Gas Field and the Plastic Recycling Act, which is used especially among other crimes.
So it’s fair to praise him for his actions at the end of the legislative meeting last week.
Thanks to pressure from Newsom, lawmakers attacked to limit rising electricity bills, increase the supply of clean energy, and expand an emissions reduction program called Cap and-Trade. Environmentalists were justly furious at the contract to advance oil drilling in Caen County, Southern California. This is a painful compromise that lawmakers may regret. But the state’s top politicians also did valuable work.
Here’s what they accomplished: And why the next governor needs to do more.
Electricity charges
Legislators have passed several bills that will help reduce electricity costs. This is a top priority for lawmakers looking to tackle the state’s high cost of living and a wise move for climate advancement. If electricity is cheap, people are more likely to drive electric cars and install electric heat pumps to warm up the house.
Perhaps most important is the utility’s profit reins.
Investor-owned utilities do not make a profit on electricity sales. They only charge customers what the company pays to buy or generate electricity. However, shareholders of such utilities, namely Southern California Edison, Pacific Gas & Electric, San Diego Gas & Electric, typically earn around 10% when companies invest in infrastructure such as new transmission lines. These profits come from monthly invoices paid by the utility’s customers.
However, under SB 254, Edison, PG&E, and SDG&E shareholders will not win the utility’s next $6 billion expense to reduce the risk of wildfire ignition from infrastructure from 2026.
SB 254 is the basis for government loans to fund the construction of several new power lines. It is cheaper than utility funds, as fee payers do not need to cover shareholder profits.
“We’re a great leader in our efforts to help our teams,” said Sen. Josh Becker (D-Menro Park), chairman of the Senate Energy Committee.
It’s easy to identify how Newsom overcomes the opposition of utility to those ideas. As Edison faces tens of millions of dollars in damages, utility industry executives have urged lawmakers to fill the declining wildfire fund that will help cover liability claims. They are desperate to avoid repeated PG&E bankruptcy filings after the 2018 camp fire.
Behold, lawmakers listened to industry pleas. SB254 contains terms from the utility shareholders and the other half from the customer. Customers have already paid the fund through a monthly bill of approximately $3. These fees will continue until 2045.
That may sound like icky, but I think it was the right call. Yes, large utilities are profit-making machines with legal obligations to impose bottom line profits above all. But when they face the climate crisis at speed and scale, they need something economically healthy.
“We had to understand that,” Becker said.
More renewable energy
Another big win for Newsom: This will help establish a Western electricity market that will allow solar and wind power to be easily shared across the state’s lines. By helping California import low-cost wind energy from intense places like New Mexico and Wyoming, and by exporting solar in the case of additional cases, the market should help maintain the light without fossil fuels and without pushing up utility bills.
Skeptics, including some environmentalists, argued that the local market would require California to abandon its grid control, and perhaps the state would require it to import coal-fired power generation from Utah and Wyoming.
Personally,. Becker said the market has been particularly useful for dozens of hours a year, when extreme heat promotes the use of air conditioners and highlights the grid. Rather than building excess solar power plants and electricity lines to avoid blackouts, California can rely on renewable resources elsewhere in the West.
Becker said California doesn’t need to be like Walmart, which makes parking lots bigger due to Christmas traffic jams.
“We can build parking lots for Christmas or build a local (energy) market,” he said.
Cap and Trade
The underlying many legislative contracts is cap-and-trade, which sets statewide restrictions on heat trapped emissions from heavy polluters, including power plants and refineries. Companies purchase emission permits at quarterly auctions and generate revenue from climate solutions.
Before last week’s bill, Cap-and-Trade was set to expire in 2030. However, experts said uncertainty about the future of the program will result in lower permit prices at auctions and lower revenues.
Newsom responded by expanding to lawmakers to extend cap and trade until 2045. The program has received rather widespread support, but his proposal wanted environmentalists who wanted lawmakers to strengthen their cap-and-trade by granting less free permits to the oil and gas industry. Big Oil, meanwhile, wanted more room to contaminate, claiming that the restrictions had increased energy costs.
The governor has come in.
High speed rails
Newsom has also been secured on long-standing bullet trains in California. The project is $100 billion on the original budget and has no timeline for completion, but Newsom probably never wavered his support for that.
He laughed when I asked Becker how he felt about the funds he had voted for.
“Can you make a comment?” he asked with a laugh again.
I want to ride a bullet train from LA to San Francisco. It can kill me and see the Trump administration. But Newsom’s insistence on dedicating a lot of money to slow-moving projects, for example, reminds him that he is more of a presidential candidate than anything else.
What Newsom wants
Think, at least in theory, his latest climate outcome: drop in energy prices. Regional electricity markets supported by profit-backed utility companies and workers-supported bullet trains. Cap and Trade Expansion, an oil company.
If you want to beat the White House, it’s all an understandable option.
It’s also no wonder Newsom infuriated environmentalists with last week’s most controversial energy law. With two of the state’s nine refineries closed the following year, Newsom decided that more drilling would be needed to ensure gasoline prices didn’t rise, even if it meant that Californians would breathe more dangerous air pollution.
Does it work? Although some experts, there is no doubt that Newsom can use the law to broaden his political appeal. Hey, Democrats who can get out behind oil drilling! He cares about the climate crisis, but he knows the cost of living comes first. It’s presidential information, right?
Until the next destructive fire, the next deadly heat wave, the next devastating flood.
That’s why Californians need to stay ahead of the climate when Californians elect a new governor next year. We need a leader who always puts the climate first, not just when politics is convenient.
This is the latest in Boiling Point, a newsletter on climate change and the environment of the US West. . Listen to the boiling point podcast .
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