Governor. Gavin Newsom set to sign a slate of bills boosting California’s fight against climate change, regulators are also finalizing a far-reaching plan to cut the state’s emissions. But the oil and gas industry is exerting pressure on regulators to shape the plan in ways that could delay the state’s progress, say critics.
A draftThe California Air Resources Board (CARB) released a plan in May. It reflects the interests oil and gas companies and agrochemical firms involved in the production and sale of biofuels. However, it relies on inefficient methods to reduce emissions, according to climate policy experts and environmental justice organizations. The plan is supposed to be a roadmap for achieving “carbon neutrality,” where the state effectively emits no greenhouse gases by 2045, while making deep cuts by 2030.
Industry goals like the development of engineered CO2 capture technology (in that CO2 is captured and stored instead of released into atmosphere) and an expanded role in liquid biofuels to replace fossil fuels in aircraft and trucks have led to a model which allows more refineries in operation, thereby reducing the risk for people living close to them. The plan also avoids certain issues. concerns about California’s cap and trade program while anticipating it will result in millions of tons of reductions — which critics worry won’t actually happen except on paper — over the next seven years.
Among the industry’s lobbyists pushing these measures are at least three former California Air Resources Board regulators, who reached out to their former colleagues at the agency on behalf of fossil fuel, business groups and agrochemical clients, according to interviews and emails obtained by Capital & Main.
Revolving door practices — in which government officials give up public service for lobbying in the private sector — have a long history in California, says Liza Tucker, a researcher at Consumer Watchdog who has investigated revolving door influence in other environmental agencies.
“It’s a real problem, and it is entrenched,” Tucker said. For example, she added, the plan focuses on reducing demand for oil and gas in the state but says comparatively little about reducing supply for export — even though climate damage in California is caused by emissions from anywhere, as greenhouse gases in the atmosphere trap heat and influence extreme weather events like droughts, heatwaves and floods.
A spokesperson for CARB did not acknowledge questions about influence from lobbyists but said regulators “heard from stakeholders in public workshops and webinars, at formal board meetings, and when requested, in meetings with staff or board members” while putting the plan together. The plan is designed to dramatically reduce emissions from transportation, energy and industrial sectors. CARB will release a final version in the coming months as it refines it based upon ongoing feedback.
Former Fuels Program Official Reps Oil, Gas, Biofuels
California’s plan to cut emissions will be implemented in part through the Low Carbon Fuel Standard (LCFS) program, which CARB says has helped the state reduce oil consumption by 2.7 billion gallons since 2011.
It’s done that by propping up biofuels made from vegetable oils and animal fats, and by encouraging companies to lower the “carbon intensity” of their fossil fuels by means such as adding ethanol to their gasoline products and using renewable power to pump oil from the ground. Companies can trade credits or use them as a way to offset their pollution.
Jon Costantino was part the first group of air regulators who designed the LCFS back during the late aughts. He went on to work for a company that helped businesses navigate the regulations. Today, he runs his own company representing oil and natural gas clients and a supplier clean car infrastructure.
CARB claims the program was a success and points to lower emissions from transportation fuel. Email records show that Costantino was in regular contact with top regulators regarding the LCFS. He urged regulators not make drastic changes to the program as companies were fulfilling their obligations.
“This thing is working. Keep up the policy signal and you’ll keep getting the investment,” Costantino explained to Capital & Main. Phillips 66 was one of his clients and recently announced that it was switching to biofuels processing at its Bay Area petroleum refinery. Costantino’s firm has taken $295,200 from Phillips 66 since 2017, almost half of it this year alone.
CARB’s plan forecasts an expanded use of biofuels through 2045. Industry watchers have expressed concern about the environmental impact of fuels such ethanol, sustainable aviation fuels, and biodiesel. These fuels were historically produced from crops that infuse changes to farmland, increasing emissions. Fuel producers counter that they will start using “sustainable waste,” such as agricultural residue, as feedstocks to reduce emissions.
The LCFS is funded by a tax on gasoline, reflecting outdated ideas for addressing climate change, says Michael Wara, director of the climate and energy policy program at Stanford University’s Woods Institute for the Environment. In the current form, the program rewards companies for actions that won’t help the state decarbonize fast enough.
“Does it make sense to use costs collected from people at the gas pump to subsidize low carbon liquid fuels?” he said. “Every year that goes by the argument gets less convincing.”
CARB’s plan also assumes that lowering oil and gas production and demand in California, plus more refining of biofuels, will lead to less petroleum refining in the state. But years of data shows oil exports from California have increased despite Californians’ declining oil consumption, according to a technical report submitted by the California Environmental Justice Alliance.
“There’s literally no limit to how much oil California refineries are allowed to import in order to export refined fuels,” said Greg Karras, an environmental justice consultant who wrote the report.
Sources who were present at the meeting on Sept. 1 stated that CARB had committed to forming an oil export task force.
Former Regulator ‘Free From Shackles’
In another example of a prominent former regulator now advocating for high-powered clients, records show a lobbyist named Virgil Welch emailed Jamie Callahan, the agency’s chief of staff and policy adviser, with a letter from agrochemical companies involved in the production of corn, a primary ingredient in U.S. ethanol.
“Wondering if you and the boss lady might do a sit down with this group [of agrochemical companies] to talk about ag/climate,” Welch wrote to Callahan. “I can fill you in more for context at your convenience if helpful, now that I am free from the shackles the kept from away [sic] from CARB!”
According to his LinkedIn page, Welch is now a Caliber Strategies partner. However, he was previously the chief adviser and special counsel for Mary Nichols, former chairperson of CARB. He developed clean air rules for medium and heavy-duty trucks, cap-and-trade, and the LCFS. Officials who are leaving the public sector to lobby for their former employers must wait at least one year.
Welch represents companies such as BASF and CF Industries, and Novozymes which manufacture pesticides. They also claim that some of them are less carbon intensive than synthetic varieties.
California allows ethanol to be blended with gasoline, but the draft plan does not mention it. It is the largest biofuel that the LCFS has incentivized historically by volume. Growing evidence indicates ethanol’s carbon emissions are on par with or worse than those of gasoline.
Welch didn’t return a request for comment.
Lobbying for offsets
The plan says little about the cap and trade program, which CARB anticipates will shave 44 million metric tons of emissions by 2030 — the equivalent of 9,480,646 cars driven for one year.
Experts are concerned that the plan will allow polluters access to use creditsRather than cutting pollution, comply with emissions laws. We can point to examples of groups that have done this. sellParticipation in forests for carbon offset credits and gaming the program.
In an email last year, Costantino reached out to Chanell Fletcher, CARB’s deputy executive officer of environmental justice, to promote offset credits. Costantino is a lobbyist at the Verified Emission Reduction Association which certifies the credits.
“Offsets haven’t been very popular with Environmental Justice stakeholders, but VERA believes there can be some common ground,” Costantino wrote to Fletcher. “I am requesting a meeting to introduce you to the group and answer any questions you may have about offsets prior to the next Scoping Plan process.”
The meeting was “more a meet-and-greet introduction,” Costantino told Capital & Main. He defended cap and trade because they have generated jobs. billionsto other climate investments via a fee on emissions. Fletcher didn’t respond to a request for comment.
Catherine Garoupa White, a member of CARB’s Environmental Justice Advisory Committee who opposes offsets, said regulators should have invited a committee member to the discussion with Costantino. She stated that regulators refused her to discuss cap-and-trade concerns because they feared it might disrupt credit markets.
“It’s incredibly obvious that carbon capture and cap and trade, those are really two things [CARB]Relying on them to make up the [emissions] shortfall.”
A group of state legislators submitted a letter to CARB with similar concerns, writing that the current plan calls for only 63% of reductions coming from direct cuts to pollution — lower than the states of New York and Washington.
Carbon Capture by Corporates
Costantino and Welch are pushing for more point source capture, where CO2 is captured at source and not released into the atmosphere.
Both the industry and trade unions have been successful lobbiedFor point source capture, the Legislature sent a august report. billGov. Newsom directed CARB to create a carbon capture and removal, utilization, storage, and storage program. It was one of the governor’s climate priorities.
Point source capture may come in handy for industries where it’s hard to limit emissions, such as cement, clay and glass production. However, it has a weak track record raising serious concerns about plans to use the technology to combat climate change. researchersThe Institute for Energy Economics and Financial Analysis.
Twelve US facilities capture 20 metric tons of emission each year. California wants to capture 4 million metric tons annually by 2045 and install capturing technology on refineries by 2030, according to CARB’s draft plan.
The plan also mentions a studyLawrence Livermore National Laboratory, point source capture promoted — through layers of front groups — by Michigan utility company DTE Energy, which has biomass power plants in California. The promotion campaign featured a toolkit for educators and students on carbon capture in the San Joaquin Valley.
Environmental justice groups submitted a letter to U.S. Department of Energy Inspector General Teri Donaldson asking for an investigation over concerns that Lawrence Livermore staff “used the credibility of the National Lab to promote policies and regulations that could benefit a company that operates power plants” in the San Joaquin Valley.
While he was still employed by CARB, Welch coordinated efforts with lab staff to promote this study. Later, he used it to lobby for the study.
Welch was introduced as a spokesperson for California Carbon Capture Coalition at a scoping meeting in June. sentCaliber Strategies $182.648.94 to lobby since September, and shares as a registered agent with many oil and gas front groups. Chevron sent$450,000 to the coalition while the Western States Petroleum Association gave $50,000.
“It’s clear in order to be successful [at cutting emissions], any reasonable scenario is going to require carbon capture technologies,” Welch said at CARB’s meeting about its emissions plan in June.
But the decade-plus lead time for installing point source capture on refineries is out of sync with the state’s compressed timeline for cutting emissions, says Stanford’s Wara.
“Do we really think we’ll want carbon capture at refineries, is that a thing we want to do at scale in 2035?” he told Capital & Main. “I haven’t seen [CARB] articulate an answer to that question that is clear, other than we need gasoline and diesel for a while … but that doesn’t tell you if we should be investing climate dollars in innovation around those fuels.”
Environmental justice committee members sent a letter to CARB in June that said carbon capture and sequestration technology “is a means of delaying meaningful climate action and increasing our investments in fossil fuel and bioenergy infrastructure.”
