Brown Drops 50% Gasoline Cut in California Amid Big Oil Protests

Back Bloomberg Sep 10, 2015 By James Nash

California Governor Jerry Brown abandoned a plan to cut gasoline use in half as part of an ambitious bill to combat climate change, after oil companies and business groups waged a multi-million dollar campaign against the effort.

Brown, Senate President Kevin De Leon and Assembly Speaker Toni Atkins, all Democrats, said Wednesday that they would drop a provision in a bill that would have mandated a 50 percent reduction in gasoline use by 2030. They said they’re moving forward with provisions that would double the energy efficiency of all buildings by 2030 and require 50 percent of electricity to come from renewable sources by then.

The legislation has been closely watched on both sides of the climate change debate, with California seen as a bellwether for initiatives in reducing carbon emissions. Oil companies had targeted moderate Democrats in suburban and rural districts whose residents drive disproportionately far. One flier depicted a family pushing a minivan down the road with the tag-line: “At least your family can get halfway home.”

“Oil has won a skirmish, but they have lost the larger battle,” Brown said at a Sacramento press conference, vowing to continue efforts to reduce use of fossil fuels.

California, home to 12 percent of the U.S. population, consumes 11 percent of the nation’s motor fuel, according to Energy Information Administration data, or about 37.5 million gallons per day.

Still, the state’s gasoline sales have slid in the last decade, dragged down by unemployment, improved fuel efficiency and consumers’ response to the 2008 surge in prices. State demand for the fuel totaled 1.28 billion gallons in May, down from a peak of 1.35 billion in the same month in 2007, the latest data available from the state Board of Equalization show.

“This is huge — this means survival for the oil industry in California,” Jay McKeeman, vice president of government relations for the Sacramento-based California Independent Oil Marketers Association, said by phone late Wednesday. “This was the biggest legislative battle that we’ve been engaged in in my 17-year career with the association. It was a laser dancing on our forehead.”

A 50 percent reduction plan could have included providing incentives for electric and hybrid cars and mandating higher miles per gallon for new cars and increasing high-speed rail investments.

Brown, De Leon and Atkins announced the decision to strip out the fuel mandate from California’s landmark climate bill a day after the Assembly voted against a related bill that would have cut greenhouse-gas emissions to 80 percent below 1990 levels over the next 35 years. That bill could come up for reconsideration after a 35-30 vote against it.

California has been the leading state on reducing carbon emissions in the U.S. The state adopted the world’s first low- carbon fuel standard in 2007 as well as the first state system for auctioning carbon allowances through a cap-and-trade program.

With global leaders meeting in Paris in November and December ahead of a Dec. 11 United Nations deadline for a pact on greenhouse gas emissions, De Leon said the world was prepared to “take its cues from California.”

“It is disappointing for sure,” said Alex Jackson, an attorney for the Natural Resources Defense Council, an environmental advocacy group. “If one were to read into this a victory for big oil, I think they would be missing the forest for the trees. The authority and commitment of the Governor and the legislative leadership to continue to move off of petroleum is undiminished.”

The lobbying group Western States Petroleum Association fought against the cuts, describing them as “‘attacks on an important industry in California designed to create conflict and controversy.’’ The group estimated that California’s petroleum producers, refiners and marketers employ almost half a million people in the state.

With the current legislative session ending Friday, Brown and leaders of both chambers concluded that they didn’t have the votes to mandate the 50 percent reduction in gasoline use, they said at the press conference. Brown suggested that he’d push for regulatory changes that wouldn’t require legislative approval that still would drive down fuel consumption.

‘‘Climate change is not just an issue for some governor,” he said. “It’s an existential issue for your children. That’s why I’ve made such a big thing of this.”

– Alison Vekshin, Lynn Doan and Mark Chediak in San Francisco contributed to this report.