ProPublica: Cap and Trade Is Supposed to Solve Climate Change, but Oil and Gas Company Emissions Are Up

Cameron Cottrill, special to ProPublica

By Lisa Song

Excerpt:

“California’s cap-and-trade program was one of the first in the world, and it is among the largest. It is premised on the idea that instead of using regulations to force companies to curb their emissions, polluters can be made to pay for every ton of CO₂ they emit, providing them with an incentive to lower emissions on their own. This market-based approach has gained such traction that the Paris climate agreement emphasizes it as the primary way countries can meet their goals to lower worldwide emissions. More than 50 programs have been developed across the world, many inspired by California.

But while the state’s program has helped it meet some initial, easily attained benchmarks, experts are increasingly worried that it is allowing California’s biggest polluters to conduct business as usual and even increase their emissions.

ProPublica analyzed state data in a way the state doesn’t often report to the public, isolating how emissions have grown within the oil and gas industry. The analysis shows that carbon emissions from California’s oil and gas industry actually rose 3.5% since cap and trade began. Refineries, including one owned by Marathon Petroleum and two owned by Chevron, are consistently the largest polluters in the state. Emissions from vehicles, which burn the fuels processed in refineries, are also rising.

Critics attribute these increases, in part, to a bevy of concessions the state has made to the oil and gas industry to keep the program going. They say these compromises have blocked steps that would have mandated real emissions reductions and threaten the state’s ability to meet its ambitious goal of slashing its emissions 40% by 2030.

“There’s no question a well-designed regulation on oil and gas can have an effect,” said Danny Cullenward, a Stanford researcher and policy director at Near Zero, a climate policy think tank. “And that was traded away for a weak cap-and-trade program.”

Experts say cap and trade is rarely stringent enough when used alone; direct regulations on refineries and cars are crucial to reining in emissions. But oil representatives are engaged in a worldwide effort to make market-based solutions the primary or only way their emissions are regulated.

Officials with the state Air Resources Board, which oversees cap and trade, say those fears are exaggerated, that California’s program is doing what it needs to do and they can tweak it over time as needed. They point to the state’s overall drop in emissions since cap and trade began in 2013, even as its economy grew. They tout a host of other, more traditional climate regulations widely considered the best in the country.

But even with all those rules working together, California needs to more than double its yearly emissions cuts to be on track to meet the 2030 target. Meanwhile, the scope of the climate crisis and public pressure for strong regulations on fossil fuel companies have risen exponentially, even in the past year.”