California’s glut of cap-and-trade allowances may cut revenue

By Dan Walters, Sacramento Bee, via Fresno Bee.

When California extended its “cap-and-trade” program of curbing carbon emissions to automotive fuels, starting this year, it was projected to generate hundreds of billions in new revenue dollars.

Prior to extension, the state’s quarterly auction of emission allowances was generating well under $1 billion a year, but applying them to fuels would, it was believed, more than double that revenue stream to over $2 billion.

California motorists burn about 15 billion gallons of fuel each year – and consumption is rising again after years of slow decline. Requiring refiners to buy emission credits, either in the Air Resources Board’s auctions or in the secondary market, would, it was believed, add about a dime to each of those gallons, most of which would show up in auction proceeds.