California cap and trade program is expanding to include transportation fuels

California’s cap and trade program is expanding to include transportation fuels. Gasoline refiners will be required to purchase allowances for the greenhouse gas emissions associated with their product, and at $12 a ton for carbon dioxide, this will raise the price of California gas for consumers by 10 cents a gallon.
The Governor and State Legislature have appropriated the funds to a variety of state agencies, and the California Air Resources Board will likely have over $200 million to disperse through its Air Quality Improvement Program (AQIP).


Over half of the AQIP funds are used to provide rebates to purchasers of plug-in and battery electric vehicles. The rebates have drawn criticism from environmental justice advocates who believe the main beneficiaries are wealthy people who would purchase Teslas with or without the incentive.
To address this, the Governor signed the Charge Ahead California Initiative (SB 1275), authored by Senate President pro Tem Kevin de León (D-Los Angeles), into law. It directs the Air Board to increase access for disadvantaged, low-income, and moderate-income communities and consumers to zero-emission and near-zero-emission vehicles.


In early 2015, the Air Resources Board will be hosting workshops and developing a plan to comply with the new law. Among the options they will be considering are limiting consumer eligibility for the electric vehicle rebates based on income, and expanding the trade-in program for older higher-polluting vehicles by offering vouchers for car sharing and bus and transit passes (referred to as the “mobility option” in the law).

In considering how to reach lower-income communities, the Air Board may want to look at combining the marketing of the vehicle incentives with the ongoing marketing for the other energy rebates funded with cap and trade dollars such as the California Climate Credit. A new combined campaign could build greater popular awareness of how the cap and trade system can benefit consumers.