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Politico
5 days ago
- Business
- Politico
Your guide to Newsom's gas-price gambits
Presented by With help from Noah Baustin and Camille von Kaenel BLOWING A GASKET: California gas prices are not particularly high right now — but you'd be forgiven for thinking they are. Gov. Gavin Newsom and lawmakers are bandying about a dizzying array of proposals to control gas costs, fueled by the impending closure of two of the state's nine refineries. Those include plans to boost in-state oil drilling, ditch the state's unique fuel blend and pull the plug on previous attempts to regulate refiners' profit margins and maintenance schedules. In other words: Get ready for CARBOB, E15, profit caps and Kern County to become household terms. As the legislative session comes to a head, we got some of the energy world's leading experts to break down if, how and when the proposals on the table would actually work. In-state drilling Newsom's draft bill to boost California crude oil extraction will likely be among the trickiest negotiations during the end-of-session rush, but market watchers say the idea could help stabilize prices long enough for the state to develop plans for transitioning off gasoline. Colin Murphy, deputy director of the University of California, Davis' Policy Institute for Energy, Environment and the Economy, said increasing oil output from regions like Kern County won't bring current prices down, but it could forestall closures of refineries optimized for California crude — like the PBF Energy facilities in Torrance and Martinez. More closures could wreak havoc on gas prices, which some experts already estimate could go up by as much as $1.21 per gallon by next August if Phillips 66 and Valero follow through on their plans to close refineries in the Bay Area and Los Angeles. 'It's one of the strongest, most important things that we can do to hedge against the possibility of a really significant increase in prices over the next decade or so,' Murphy said. Democratic lawmakers are largely lining up behind the proposal, though Assemblymember Gregg Hart — who represents oil-rich Santa Barbara — hinted that efforts to increase drilling outside of Kern County will face pushback within the caucus. And it's ruffling feathers among environmentalists, who've framed it as a giveaway to Big Oil that will harm public health. Fuel blends Lawmakers are pushing a handful of bills that would move California away from its unique fuel blend and allow for a higher-ethanol option that could shave a few cents off each gallon of gas. SB 237, a proposal backed by Senate President Pro Tem Mike McGuire, would direct state officials to consider dropping California's unique, low-pollution fuel, known as CARBOB, in favor of a West-wide standard. UC Berkeley economist Severin Borenstein said the idea could reduce prices in theory, because conventional U.S. gasoline is cheaper to make, but California lacks the infrastructure to pipe fuel in from neighboring states. 'It may lower it a few cents, but I don't think it solves the import issue,' he said. Another proposal would allow the sale of gasoline blended with 15 percent ethanol, up from 10 percent now. Ethanol is cheaper than gasoline, and California is the only state to still limit blending to 10 percent. Jeremy Martin, director of fuels policy for the Union of Concerned Scientists, said E15 isn't suitable for all cars and very little is actually used in the U.S. 'I think it's important not to overestimate how dramatic an impact that would have,' he said. Profit margin caps There's widespread agreement among lawmakers, industry and even some environmentalists that state officials should ditch a 2023 special session law that gave the California Energy Commission the authority to consider a cap on refiners' profit margins. But it might not have a big impact, either. Borenstein said California would still lack the data to determine what refiners' margins are in order to develop a tax or penalty on them, and that companies would easily be able to manipulate outcomes by shifting around costs in their supply chains. 'I have not been supportive from the very beginning,' he said. 'I think it's just logistically not doable.' The law also represents the biggest political punching bag for oil companies that argue California is a hostile place to do business and is running refineries out of town. The commission delayed an expected vote today to postpone the profit cap rule. (Read more on that development below.) Minimum gas reserves Experts say the state's other special session law, a proposal to require companies to hold more fuel reserves to stop shortages when they go offline for emergencies or scheduled maintenance, makes sense in concept, but comes with its own political dilemmas. Increased gas storage could prevent a crisis like in 2023, when prices soared above $5 per gallon amid a fuel shortage from in-state refineries. But Phillips 66's closure announcement in October and Valero's in April came on the heels of this policy being passed, highlighting the power the industry has to push back against laws they don't like. 'The world without a lot of reserve requirements has led us to these spikes in gasoline prices,' Murphy said. 'But you have to build more storage for it, and that's a cost that refiners who are already thinking about just not being in business in the state anymore, probably aren't terribly willing to bear.' The Jeremy Martin idea Lawmakers are taking notice of a regulatory scheme devised by Martin and his team at UCS that would allow gas stations to use a limited amount of conventional U.S. gasoline — instead of the state's blend — during shortages, keeping the pumps flowing and prices down. In exchange, suppliers who take advantage of the voluntary system would put 25 cents per gallon into a mitigation fund to help low-income drivers afford electric vehicles. That proposal is garnering kudos from other experts. 'It seems like a really reasonable middle ground,' Murphy said. And Hart said that's an idea he's ready to push for in a gas policy deal. 'That's another piece I'm going to advocate for,' Hart said. 'I want us to be innovative.' — AN Did someone forward you this newsletter? Sign up here! DELAY DELAYED: California energy regulators were scheduled on Wednesday to put the final touches on Newsom's turnaround on Big Oil by officially postponing an industry profit cap and refinery maintenance regulations. Instead, they kicked the can down the road. In a surprise announcement at the beginning of the California Energy Commission's meeting, officials said they needed more time to consider their resolutions to postpone the implementation of the maximum gross gasoline refining margin and penalty implementation as well as the refinery turnaround timing. After the meeting, CEC Vice Chair Siva Gunda told POLITICO that the key issue still at play is how long exactly the agency should delay its implementation of the oil industry regulations. For the delay to have its intended effect, it must last long enough to give refiners and their financiers the confidence they need to continue investing in their California infrastructure, according to Gunda. 'Qualitatively I can definitely say that typically about five years is a cycle, and we want to provide at least one investment cycle of confidence,' Gunda said, adding that the discussions on the exact timeline remain ongoing. Whether a five-year delay would be enough to sate the industry is unclear. In a statement, the Western States Petroleum Association celebrated the CEC's plans to delay the margin cap policy, but didn't weigh in on questions of timing. 'A margin cap and penalty would be a misguided policy that fails to address the root causes of California's elevated gas prices — high costs, expensive regulations, supply constraints, and the reality that gasoline is, and will remain, a critical driver of our state's economy,' WSPA spokesperson Jim Stanley said. The closely watched refinery rules were the cornerstone of two special legislative sessions that Newsom called each of the previous two years. SB X1-2 gave the CEC the ability to limit refiners' gross profit margins, and AB X2-1 gave it the authority to regulate backup supply when refineries go offline for maintenance. Newsom reversed course earlier this year after Phillips 66 and Valero announced plans to shutter two of the state's nine refineries, asking Gunda in April to make sure refiners 'continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.' CEC officials signaled that they intend to bring the proposal before the commission at its next meeting, which is scheduled for Sept. 10. — NB HUDDLE UP: Refinery regulations aside, Newsom sent a clear message to Sacramento on Wednesday: He wants lawmakers to prioritize passing legislation creating a multistate west-wide energy grid. Newsom invited members of the coalition pushing for the passage of a 'workable' SB 540 to his offices in the so-called Capitol swing space, then sent out photos of the meeting on social media. The guest list included: NRDC Director of California Government Affairs Victoria Rome, Environmental Defense Fund California State Director Katelyn Roedner Sutter, Coalition of California Utility Employees representative Marc Joseph, California Chamber of Commerce Policy Advocate Jon Kendrick, Western Freedom Executive Director Kathleen Staks, California Municipal Utilities Association Director of Energy Derek Dolfie, Independent Energy Producers Association CEO Jan Smutny-Jones and American Clean Power Association California Executive Director Alex Jackson. 'I'm calling on the Legislature to enable the expansion of regional energy markets to lower energy costs, reduce air pollution, and avoid power outages,' Newsom wrote in his post. 'This is our best shot at making electric bills more affordable and securing a clean, reliable energy future.' — NB TAKING FLIGHT: A rare Southern California butterfly just got a little more political. The California Fish and Game Commission voted Wednesday to give the Quino checkerspot, a black, white and orange butterfly in San Diego County, temporary endangered species protections under state law — over the objections of housing developers. The commission will now study the butterfly more in depth and come back in at least a year to vote on whether to make the protections permanent. Developers have already been wrangling with the butterfly since it landed on the federal endangered list in 1997, including by having to set aside land for its survival. But environmental groups who petitioned the state to protect the species argued the additional state protections are essential to avoid backsliding under the Trump administration, which has gone after endangered species and critical habitat protections broadly. Building industry groups, meanwhile, warned state officials the state protections would bring more red tape, slow housing projects and unintentionally undermine existing hard-won conservation deals. The state wildlife officials determined that the butterfly faced significant threats from climate change and habitat loss and fragmentation due to development, which has already reduced its range by over 75 percent to just a few spots in San Diego County. — CvK ON THE DOCKS: The Port of Los Angeles recorded its busiest month for imports ever in July, but its executive director warned that the good times might not last. Port of Los Angeles Executive Director Gene Seroka announced Wednesday that the country's largest port brought in over 1 million container units last month, surpassing the complex's previous record in May 2021, as shipping rebounded from pandemic shutdowns. That comes after the port also saw its busiest June on record last month. The flurry of activity comes after a slow May, which coincided with Trump's decision to increase tariffs on China to 145 percent. Trump temporarily lowered that rate on May 12 and has issued a series of extensions — including a 90-day reprieve yesterday. Seroka said that he expects July imports to be the peak, as importers rushed to stock up on inventory for the rest of the year, though he anticipates a strong August. But he cautioned that tariff uncertainty makes predicting the future difficult. 'The bottom line is we just don't know what's gonna stick, or what's gonna change,' he said. 'For right now, the safe bet is less cargo, but nothing overly dramatic that would put any of us in peril.' — AN SETTING THE AGENDA: On Wednesday, Aug. 27, POLITICO is hosting its inaugural California policy summit: The California Agenda. Come see the Golden State's most prominent political figures — including Sen. Alex Padilla and gubernatorial candidates Katie Porter and Xavier Becerra — share the stage with influential voices in tech, energy, housing and other areas at the forefront of the state's most critical policy debates. The live event is currently at capacity, but will be streamed. Advance registration is required. Stay tuned for more on speakers and discussion topics, and request an online invite here. — A sustainable aviation fuel refinery in Los Angeles that was once touted as a success story quietly closed down in April. — Agricultural tycoons Stewart and Lynda Resnick plan to shut down a grape nursery near Bakersfield at the center of a labor fight and donate it to UC Davis. — Home sale prices in the Central Valley are 2.4 to 5.4 percent lower because groundwater pumping is causing the land to sink, according to new research from UC Riverside.
Politico
6 days ago
- Automotive
- Politico
Another Trump-proofing plank is breaking
Presented by With help from Camille von Kaenel, Will McCarthy, Alex Guillén and Noah Baustin DEAL OR NO DEAL: The Trump administration is taking away California's backstop Trump-proofing tactic. The Federal Trade Commission announced an agreement with four heavy-duty truck manufacturers and their trade association Tuesday, declaring California's agreement with them to continue meeting the state's zero-emission sales targets 'unenforceable.' With that, the Trump administration has kicked out one of the last remaining legs in California's strategy to protect its nation-leading climate regulations — its voluntary deals with industry. 'The Commission's swift action will put the Clean Truck Partnership squarely in the rearview mirror and prevent repeats of CARB's troubling regulatory gambit,' Taylor Hoogendoorn, the deputy director of the FTC's Bureau of Competition, said in a statement. To recap: The California Air Resources Board signed a deal in 2023 with nine truck manufacturers to abide by California's rules 'regardless of whether any other entity challenges California's authority to set more stringent emissions standards under the federal Clean Air Act' — i.e., in case President Donald Trump returned to power and tried to dismantle the state's special authority to set stricter-than-federal vehicle rules, as he did during his first term (and as he did again in June). On Monday, prior to the FTC's announcement, the companies ('original equipment manufacturers,' or 'OEMs' in industry parlance) filed a lawsuit in federal court in Sacramento, arguing that they didn't foresee this particular regulatory twist. 'The OEMs are in an impossible position,' Daimler, Volvo, International Motors and PACCAR argued in Monday's suit. 'The OEMs are subject to two sovereigns whose regulatory requirements are irreconcilable and who are openly hostile to one another. Each wields a hammer to enforce its will on industry, leaving OEMs — who simply seek to sell heavy-duty trucks in compliance with the law — unable to plan with the necessary certainty and clarity where their products need to be certified for sale and by which regulatory authority.' Environmentalists say that argument, which came just days after the U.S. Justice Department sent a cease-and-desist letter to CARB, doesn't pass the smell test. 'The Clean Truck Partnership was designed exactly for a moment like this,' said Adam Zuckerman, senior clean vehicles campaigner with Public Citizen's Climate Program. CARB declined to comment on the litigation or the FTC's move. But a former CARB official who helped negotiate the 2023 deal said it represents a significant softening of California's regulatory hammer, especially after the loss of its EV sales mandate for light-duty vehicles. 'It's bad,' former CARB Deputy Executive Officer Craig Segall said about the potential impacts to the state's pollution-reduction efforts. 'They're still going to sell some electric trucks, but it's somewhere between bupkis and inadequate.' It's unclear how the other companies that signed on to the deal — including Cummins, Ford, General Motors and Stellantis — will react after not joining the lawsuit or being named in the FTC announcement. A spokesperson for Hino Motors declined to comment, while the other companies didn't respond immediately to requests for comment. The Truck and Engine Manufacturers Association, which joined the FTC agreement but not the lawsuit, also didn't respond. California still has one of the companies on its side, at least in the light-duty sector. Stellantis, which inked a deal last year to follow the state's EV sales rules even if they went away, reaffirmed its commitment in June after Trump signed a resolution revoking the EPA waiver California needs to enforce it. Segall argued that the four truck-makers' retreat from their ZEV commitments won't stop a long-term global trend towards zero-emission models that will benefit California. He said the state still has tools at its disposal, like offering incentives for companies and fleets that buy electric trucks, and excluding those who don't. 'It's not like there's any statute making California buy from these [companies], or any statute requiring it to provide particular incentives to them,' Segall said. California could put that plan into action soon. State agencies are supposed to deliver recommendations for bolstering the EV market to Newsom's office this week, after the governor signed a June executive order that directed CARB to start developing new regulations and suggested the state offer preferential treatment to companies that continue to work towards electrification goals. — AN Did someone forward you this newsletter? Sign up here! SPEAKING OF CARB: Congressional Republicans are demanding that the agency hand over documentation on which model year 2026 cars the state has approved for sale, after saying they received reports that California is still enforcing its EV mandate despite it being revoked. House lawmakers did not include specific details in a letter accusing CARB of continuing to enforce the Advanced Clean Cars II rule but argued that the agency has only certified vehicle models that are compliant with it since the regulation was revoked on June 12. 'Forcing Americans to buy these vehicles would strain our electric grid, raise costs, and increase our reliance on China,' said Rep. Brett Guthrie (R-Ky.), chair of the House Committee on Energy and Commerce. 'Our investigation will look into whether California is continuing to enforce an EV mandate in violation of federal law.' A CARB spokesperson said the agency is reviewing the letter and declined to comment on it. — AN NOT OVER TILL IT'S OVER: More than 200 environmental groups urged Gov. Gavin Newsom, Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas to reverse some of their June weakening of the California Environmental Quality Act in a Tuesday letter. They urged lawmakers to remove the exemption from environmental review of 'advanced manufacturing,' which includes semiconductor factories, and to bolster protections for habitat for protected species. Top lawmakers, including Sen. Scott Wiener, had promised some sort of clean up language when voting SB 131 through in June just days after its introduction, but they have yet to introduce new legislation. The conservation and environmental justice signatories span the Natural Resources Defense Council to the Asian Pacific Environmental Network to Beyond Plastics. Six environment-oriented senators also urged McGuire and Wiener to narrow or remove the advanced manufacturing exemption and bolster habitat protections in their own letter last week. — CvK BACK TO THE BALLOT: A new property insurance showdown is here: A California insurance agent has officially filed a proposed ballot initiative to reimagine how the state regulates insurance. Elizabeth Hammack, who described herself as the agency principal and owner of an insurance intermediary called Panorama Insurance Associates, submitted the proposed initiative to the secretary of state on Monday. The long-shot initiative aims to repeal and replace Proposition 103, the 1988 ballot measure that made the Insurance Commissioner an elected position, rolled back auto and property insurance rates and set up public participation in rate reviews and approvals. The proposition has helped keep state's insurance rates below many other states, saving consumers more than $150 billion. But the property insurance industry has long chafed at the proposition. The record-breaking wildfire losses that spooked some out of the state have amped the stakes, with the insurance industry blaming the proposition for lengthy rate reviews and premiums that haven't kept up with the rising risk. Consumer Watchdog, the organization that sponsored Prop. 103, had already been preparing for a possible rematch, floating its own possible ballot measure to mandate insurers provide coverage in fire-prone areas. Denni Ritter, the American Property Casualty Insurance Association's vice president for state government relations, said the organization was 'not involved in drafting this measure' and was reserving judgment until staff had fully analyzed it. — WM, CvK HAPPY TRACKS: The California Public Utility Commission's top safety boss is riding off into the sunset. Roger Clugston, director of the Railway Safety Division, is retiring after 24 years of public service, the agency announced in a fond farewell. Clugston launched his career building tracks for the Santa Fe Railroad in the '70s and joined the CPUC in 2001 as a track inspector. He rose through the ranks, helping to launch the first California railway bridge and tunnel inspection programs. He took the helm of the newly organized Rail Safety Division in 2019, which now has 125 employees and is responsible for keeping 10,000 miles of railways safe. 'I came into the CPUC as an entry level inspector and moved up to director, and without a college degree,' Clugston said in a statement. 'You can do anything if you're willing to work hard for it.' It's unclear who will replace Clugston. The agency is in the process of filling his position, a spokesperson said. — NB — CalMatters found that the state of California may have to forgive up to 42 percent of the $1.4 billion loan it gave Pacific Gas & Electric to keep Diablo Canyon Power Plant afloat. — Ford is making a $30,000 fully electric truck in 2027. — A new study determined that livestock operations contribute to harmful levels of fine particulate matter.
Politico
09-08-2025
- Business
- Politico
Gregg Hart is in the mix on gas prices
With help from Camille von Kaenel TAKE IT TO HART: Assemblymember Gregg Hart isn't shying away from California's thorniest climate fights. The Santa Barbara Democrat is jumping into the debate over gas prices, arguing that new drilling in oil-rich Kern County needs to be on the table, while pushing back on efforts to increase production in his coastal district. He's wading into the politically fraught waters after Gov. Gavin Newsom's office dropped draft language last month for a proposal to boost in-state oil drilling and keep refineries open. Hart said that a gas policy deal also needs to include electric vehicle incentives that help drivers make the switch from gas. And he's championing a proposal to allow fuel suppliers to use gasoline from other states — instead of California's unique, low-pollution blend — during shortages in an effort to keep pumps flowing and prices down. Hart spoke with POLITICO about gas price politics, cap-and-trade negotiations and SpaceX's plan to increase rocket launches from a base in his district. This interview has been edited for length and clarity. How are you feeling about the draft oil bill from the governor's office? I'm cautiously optimistic. I think that there is a way to get to a yes vote. I've been looking very carefully at what the California Energy Commission has been writing to the governor, and I think that they are navigating very narrowly between trying to make sure that we have sufficient crude oil production in the state to keep the refineries that are dependent on that locally sourced supply in business, and not over produce to the point where we cause more environmental damage than we'd like to have. It's a really complicated transition, and I think that the administration understands that the details matter. I haven't been able to get all my questions answered about the language specifically that talks about additional onshore oil development in my county and some of the other coastal counties. That's really the big issue for me. I think the Kern County production question has been litigated for more than 10 years, it has been analyzed very carefully, and the place it's going to end up is appropriate, given the circumstances in California. The governor's bill proposes capping two wells for every new well drilled, among other environmental protections. Environmental justice groups, however, say it's still a retreat from the state's climate agenda. Should the state do more to strike a balance? I'd like to see this proposal have some additional incentives for electric vehicle adoption, particularly focusing on long-distance commuters who consume more gas than others. We've got folks in those environmental justice communities who are driving older cars long distances and disproportionately contributing greenhouse gas impacts. There is a heavy cost burden on those individuals as well, and they are the first people to be hurt by increasing gas prices. So there's a nexus there. If we're trying to make progress and help solve this problem by reducing demand, not just increasing supply, I think it'd be appropriate for us to include some additional incentives in that space. What other concepts for stabilizing gas prices are you thinking about? Minimum production requirements, that's one part of the toolbox. Changing the fuel blend so that we have additional gasoline options available to bring into California is another thing that's in the toolbox. I don't think that saying we're open to these changes means we're permanently abandoning the agenda of protecting health from air pollution. And as I was talking about, drivers in California are spending a lot of money on gas. If we could figure out a way to get them into electric vehicles, we would be reducing air pollution and benefiting public health. We can also trade off temporary periods of time where we reduce our gas standard in order to accommodate a crisis. You might be able to do the math and say, 'Hey, this is still a net benefit.' This debate around oil policy comes as lawmakers are also trying to reauthorize the cap-and-trade program. Is that going to get done before the end of the legislative session? I think the governor is very interested in landing it as soon as possible, and he has learned to use the end of session as a tool to get things done. I think it's pretty close. I don't know what the Senate has done with their version, but the Assembly version is pretty close to being ready. It is probably going to be closer to straight re-authorization than some of the changes that are out there floating around. But it's not a completely straight re-authorization, and I think the appropriate tweaks are there. But the program works pretty well. I know folks want to restrict allowances and stuff like that, but the impact on consumers is so dramatic if you do that. And I just in this moment in time, I can't see that happening. The California Coastal Commission is voting next week on a proposal from the U.S. Space Force to increase the number of rockets Elon Musk's SpaceX is allowed to launch from a base in your district. Do you support that plan? I read the commission's report and I think they describe the situation really well, and their point is that the Space Force hasn't been forthcoming with the information that they need to make the determination. I agree that they should be pressing for that, but I also understand that the Space Force is going forward regardless of the Commission's decision. People need to dot the I's and cross the T's, and there's a time frame here that doesn't work for that. The Space Force Base and the federal government, in my judgment, should be doing everything they can to make sure that this is grounded in science and that we know that we're doing the most we can to mitigate the impacts of these launches. — AN Did someone forward you this newsletter? Sign up here! CASH IN LIMBO: The $4 billion in high-speed rail grants the Trump administration revoked from California isn't going anywhere, at least for now. State officials reached an agreement with the Trump administration last month that prevents it from awarding the funds to other projects while a lawsuit California has filed plays out. The development came after President Donald Trump announced last month that his administration had pulled federal funding for the planned rail line from the Bay Area to Los Angeles, following through on his threats to kneecap a project that has become a political punching bag for Republicans. The revocation followed a scathing Federal Railway Administration report that claimed the project has no viable path forward and has failed to meet grant terms after missing deadlines and budget shortfalls. California Attorney General Rob Bonta quickly sued, arguing in court filings that personal animus drove the president's decision. He pointed to what he said were false statements by Trump and Duffy that the project was 'hundreds of billions of dollars over budget' and mired in corruption. The Trump administration attempted to revoke $1 billion in grants for high-speed rail during his first term, but that funding was eventually restored under former President Joe Biden. — AN CARBON SCAM: Arizona regulators uncovered a scheme to defraud carbon market investors, disrupting it before it could claim victims in California. Climate Care Innovations, an Arizona-based corporation, tried to attract investors by telling them it owned 3.3 million pollution allowances tied to Washington state's carbon credit market that were worth as much as $170 million. None of it was true, according to the Arizona Corporation Commission. The company now faces securities fraud allegations in Arizona and has become the first company Washington state has banned from operating in the carbon market program, Anne C. Mulkern reports for POLITICO's E&E News. The Arizona commission also said in a filing that Climate Care Innovations falsely claimed to be registered to offer offset projects under the California carbon market. The company has never had any activity in California's market, said California Air Resources Board spokesperson Dave Clegern. — AN, AM SETTING THE AGENDA: On Wednesday, Aug. 27, POLITICO is hosting its inaugural California policy summit: The California Agenda. Come see the Golden State's most prominent political figures — including Sen. Alex Padilla and gubernatorial candidates Katie Porter and Xavier Becerra — share the stage with influential voices in tech, energy, housing and other areas at the forefront of the state's most critical policy debates. Reservations to the live event are full, but it will be streamed. Advance registration is required. Stay tuned for more on speakers and discussion topics, and request an online invite here. DUCKS AND TREES: Tony Andersen, the deputy secretary for communications at the California Natural Resources Agency for the past two years, starts Monday as the executive officer of the Board of Forestry and Fire Protection. — CvK — San Francisco is racing to adopt new all-electric building codes before a state pause on building code updates goes into effect Oct. 1. — S&P Global Ratings downgraded State Farm's credit rating from an A to an A-. — The Trump administration is letting California's decal program giving EV drivers access to carpool lanes expire.
Politico
03-07-2025
- Automotive
- Politico
Jumping fuel prices are a gas, gas, gas
With help from Camille von Kaenel STEPPING ON THE GAS: Gov. Gavin Newsom and President Donald Trump are both basking in relatively low gas prices ahead of one of the country's biggest driving weekends. But California regulators and lawmakers are also desperately scrambling to keep gas prices steady in an acknowledgement that Republican political attacks on the issue are sticking. Tuesday could have been a doozy, after both the state's annual gas tax hike and closely watched amendments to the low-carbon fuel standard aimed at hastening the transition away from fossil fuels took effect — and didn't cause an immediate spike in gas prices. 'Republicans spent the last 6 months fearmongering that gasoline prices would 'increase by 65 cents on July 1,'' Newsom's office said in a press release Wednesday, pointing to data from AAA. 'Did this happen? The answer: No.' But lawmakers are getting impatient. They advanced a bill Wednesday that would have the state immediately allow suppliers to blend more ethanol into gasoline — 15 percent, up from a limit of 10 percent now. The move would make California the last state to switch to E15, a blend that a study last year by UC Berkeley and US Naval Academy economists found could lower gasoline prices by 20 cents per gallon. It's something the California Air Resources Board has been studying since 2018 but hasn't yet greenlit. Ethanol, while less carbon-intensive than gasoline, comes with separate concerns related to growing corn for production. Assemblymember David Alvarez said needs to pick up the slack. 'The reason this bill is needed is due to regulatory delays that we've seen from the Air Resources Board,' he said at today's hearing. CARB didn't immediately respond to a request for comment. But the concept dovetails with Newsom's budget language, which gives $2.3 million to help CARB finish the job. Another idea, floated by Senate Democrats last week in a sweeping bill that also took aim at the low-carbon fuel standard, is to move away from another of the state's bespoke gasoline formulations: CARBOB, a '90s-era summer blend aimed at reducing smog, in favor of a West-wide blend that refineries in neighboring states would also produce. That West-wide fuel standard concept has garnered a surprising amount of interest among environmental and clean transportation groups. 'I do think it's something worth examining,' said Katelyn Roedner, California director for the Environmental Defense Fund. 'Do we still need a special blend?' And the E15 idea is getting good reviews, too. 'Generally speaking, it makes a lot of sense, provided we do it in a way that doesn't require expanding ethanol production capacity,' said Colin Murphy, co-director of the Low Carbon Fuel Policy Research Initiative at Davis' Institute of Transportation Studies. But neither is a quick fix. If California moves away from its low-smog formulation toward more reliance on outside sources, it would need to quickly build up its capacity to import more fuel while making sure not to undercut in-state refineries and potentially create more closures, Murphy said. It's unclear, so far, what other states think of the idea, which would hinge on their buy-in to pull off. Spokespeople for the governor's office in Arizona, Nevada, Oregon and Washington didn't immediately respond to requests for comment on the bill. But Arizona and Nevada rely on California for gasoline supplies and are the most likely candidates to have open ears. The governors of both states jumped into the Sacramento fray last year, lobbying against a special session bill that requires refineries to maintain backup fuel supplies for when facilities go down for maintenance. And CARB cautioned that its E15 rulemaking could still take a while. CARB spokesperson Lindsay Buckley said that process could be finished sometime in 2026, 'assuming we get the staff and are able to start the rulemaking process later this year.' — AN Did someone forward you this newsletter? Sign up here! CEQA HANGOVER: State lawmakers are still advancing a suite of one-off bills poking holes into environmental reviews days after Newsom signed a sweeping overhaul of the California Environmental Quality Act in the name of speeding up housing development — though at least one said she's had enough. 'At least for me personally, it's going to be very difficult for me to support any CEQA exemption or streamlining bills moving forward, just because I think we need to tip the balance the other way now, just because CEQA has been really dismantled,' Sen. Caroline Menjivar said at a Wednesday hearing on several more of them. Menjivar voted for the CEQA overhaul on Monday but declined to support bills waiving more environmental reviews for wildfire prevention projects near evacuation routes and for exploratory geothermal energy projects in the Senate Environmental Quality Committee on Wednesday. Both bills passed with little to no other opposition. — CvK SUN BURN: The board of a powerful irrigation district in the desert of Southern California has had enough with solar panels replacing crops. The Imperial Irrigation District passed a resolution on Tuesday opposing new utility-scale renewable energy development on farmland in the Imperial Valley, where farmers grow alfalfa, lettuce and other crops but face increasing water restrictions that have forced some to leave their fields fallow. Renewable energy developers see potential in the desert region's open spaces and have already covered nearly three percent of the region's total farmland with solar panels. 'It's time to draw a line,' said IID vice chair JB Hamby. 'Farmland in the Imperial Valley feeds this country and anchors our economy. … We support renewable energy — just not at the expense of our future.' Hamby is currently locked in multi-state negotiations over dwindling Colorado River supplies, which irrigate the Imperial Valley's farmland. The irrigation district will pass along its recommendation to local, state and federal land use decision makers, including the Imperial County Board of Supervisors. — CvK GRID GAMES, CONT: The Public Advocates Office, an independent organization within California's utility regulator that lobbies on behalf of ratepayers, has taken its stand on a controversial grid regionalization proposal winding its way through the state Legislature: yes, if amended. The position, detailed in a letter on Friday, matters because the proposal has divided environmental and ratepayer groups, with some saying the proposal would reduce costs and improve grid reliability and others saying it could undercut California's renewable energy goals. The director of the Public Advocate's Office, Linda Serizawa, is largely taking the side of the business and utility groups who want to see state lawmakers reverse recent amendments to the bill. Those amendments gave California more control of the regionalization, but Serizawa wrote that may risk alienating other states interested in linking up with California. — CvK — Tesla posted another drop in vehicle deliveries for the second quarter of 2025. — Between rising seas and raging wildfires, California may be running out of safe places to build the housing it needs. — Recycling firm Redwood Materials is hooking up used electric vehicle batteries and solar panels to power a data center in Reno, Nevada.
Politico
26-06-2025
- Business
- Politico
Labor and enviros take it to the parking lot
With help from Camille von Kaenel THIS WAY OR THE HIGHWAY: The fight over California's highway expansion efforts is entering the affordability arena. Environmental groups and labor unions plan to fill the Sacramento Convention Center tomorrow in a face-off over roughly $600 million in funding for six highway projects ranging from the Bay Area to Los Angeles County. The California Transportation Commission is expected to approve the slate of projects, which have been in the pipeline for years and already have sign-off from Caltrans. But environmental groups say they plan to use the moment to unveil a change in strategy: talk less about pollution, and more about keeping dollars in people's pockets. 'Driving is the most expensive way to get around,' said Jeanie Ward-Waller, director of ClimatePlan and a former Caltrans official who sued the agency after saying she was demoted for objecting to highway expansion plans. 'Owning a car, maintaining a car, putting gas in your car. There's so much focus right now on gas prices, and we're not doing anything to give people affordable options.' It's the next chapter of a fight at the typically sleepy California Transportation Commission that started playing out last year over $200 million to widen I-15 in the Inland Empire, which ended with former commissioner Joe Lyou, president and CEO at Coalition for Clean Air, blasting his colleagues from the dais. Greens are hoping to keep the agency in the spotlight by arguing that road-widening is part of the affordability agenda that's taken Sacramento by storm. They're tying it to the same angst around high gas prices, housing costs and food prices that's shifted the political discourse around climate from an emphasis on reducing emissions to helping Californians afford living in the state. (Look no further than the bill introduced Tuesday that takes aim at the state's emissions market for transportation fuels.) The construction labor unions that build and maintain California's expansive highway system aren't buying it. Michael Quigley, executive director of the California Alliance for Jobs, which represents carpenters, laborers, contractors and other construction unions, called enviros' opposition to highway projects a political ideology that's not rooted in concerns about costs. 'Historically, infrastructure has not been such a politicized issue,' Quigley said. 'I think it goes back to the philosophical disconnect between the people who have postgraduate degrees in environmentalism seeking to impose policies and programs that make it harder to live for working Californians.' While environmental groups are leaning hard into the affordability rhetoric, they're less worried about the threat of federal funding linked to pollution standards being held up. That's because if President Donald Trump has his way, California officials could be forced to think about their transportation infrastructure strategy sooner rather than later. EPA could soon attempt to sanction California for failing to meet federal air quality standards under the Clean Air Act — something that's all but assured after Republicans revoked California's authority to enforce its vehicle emissions rules. That would put billions of federal highway dollars at risk, and CARB Chair Liane Randolph told lawmakers last month that the loss of the waivers would mean they'd have to think hard about spending more on public transit and things like electric vehicle incentives to reduce pollution. From Ward-Waller's perspective, that's a potential win. 'For the funds that are being used to expand highways, good riddance,' she said. — AN Did someone forward you this newsletter? Sign up here! FIRE ON THE MOUNTAIN: Could $9 million in fuel breaks have slowed the Eaton Fire enough for firefighters to evacuate Altadena residents and prevent damage to homes? It's hard to know for sure, but that's the case made by new research from analytics firm Vibrant Planet, shared exclusively with California Climate. The findings use Vibrant Planet's wildfire behavior model to highlight how preventative landscape-scale treatments can avoid losses in the case of a fire. For example, the model determined that $15.3 million spent around Boulder, Colorado, in prescribed fire and both commercial and non-commercial vegetation trimming could reduce structure losses by 62.9 percent in case of a fire sparking in the forest, avoiding $123 million in losses. The data is part of a pitch for more investment in wildfire prevention and fewer limits on the treatments. On Thursday, Vibrant Planet CEO Allison Wolff is scheduled to testify to Congress on wildfire technology and her support of the Fix our Forests Act, a bipartisan bill that passed the House and is pending in the Senate. — CvK TURN ON THE POWER: Over a dozen blue states are about to have their federal electric vehicle charging taps turned back on. A Washington federal judge late Tuesday blocked the Trump administration from freezing funding approved under President Joe Biden through the National Electric Vehicle Infrastructure program, POLITICO's James Bikales reports. That funding won't restart immediately, as Judge Tana Lin issued a seven-day stay pending an appeal by the government. Trump's Department of Transportation suspended all new spending through the $5 billion program in February, arguing that it was reviewing the funding criteria. That pushed some states, like Michigan and Vermont, to pause their NEVI programs, though California did not cancel its first round of nearly $33 million in awards. California charger operators say that while the $352 million in NEVI funds the state is slated to receive is dwarfed by in-state and private resources, the program incentivizes building in less profitable rural areas. — AN DRAMA IN THE FAST LANE: Senate Republicans' budget wonk is raising a red flag over a plan to use gas tax dollars to create temporary priority lanes for athletes and officials during the 2028 Los Angeles Olympics. Sen. Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, said in an interview that he's not opposed to spending in support of the Olympics, but pushed back on the budget item being included late in the cycle without debate in prior committees. Democrats' budget would tap $17 million from the State Highway Account, which is funded by gas taxes, to help Caltrans design a transportation network for the Olympics. (The agency could request up to $20 million more as needed.) That would include temporarily converting carpool and toll lanes for use only by approved vehicles, and new digital signage alerting residents to the changes. Niello contended that gas taxes are for new construction and repairs, and suggested that the state could instead offer Los Angeles a loan to be repaid if the games prove profitable. 'I can certainly see the need for lane repurposing to help traffic move more smoothly,' Niello said. 'But the problem is it will be exactly the same transportation infrastructure once they're done.' — AN IT'S NOT ALL BAD: The death of California's electric vehicle waiver and potential loss of federal tax credits have EV makers in a bind, but Cox Automotive analysts say it's not all doom and gloom for the market. Stephanie Valdez Streaty, director of industry insights at Cox Automotive, said during the company's mid-year review of the auto industry Wednesday that rapid expansion of EV options on the market offers 'a bright spot that signals long-term strength.' Streaty cautioned, however, that while more market maturity is a 'win for consumers', it does pose challenges for companies that now have to deal with more supply chain constraints in trying to build out so many different models. But she said the tradeoff is that more car buyers can now find an EV model that fits their 'lifestyle, budget and brand preference.' Streaty's assessment of the EV market comes amid concerns about the overall health of the auto industry. That has largely been driven by Trump's 25 percent tariff on imported cars and parts, which automakers warn will drive down supply and raise prices. — AN — A Los Angeles County Superior Court judge ruled that California's insurer of last resort is violating state law by mishandling smoke damage claims after the Los Angeles fires. — Tech companies have put nearly half of their data centers in water-scarce regions. — A Houston-based startup is testing oil-eating microbes in a retired California oilfield.
