The Crude Reality of California’s Carbon Market: More Pollution

The amount of carbon dioxide emitted annually in New York City visualized as one-tonne spheres. Graphic by Carbon Visuals, CC.
The amount of carbon dioxide emitted annually in New York City visualized as one-tonne spheres. Graphic by Carbon Visuals, CC.

Cap-and-trade, the popular name for California’s carbon market, is touted as the global warming salvation of humanity. This market-based scheme of commercializing carbon is also euphemistically referred to as a “carbon pricing mechanism.”

Carbon markets are supported by big oil and big emitters, as well as large NGOs, foundations, and mainstream media. Called “the only politically viable” solution to climate change, they are proliferating throughout the world. Many banks, particularly those with experience in other derivative markets, are proudly on board.

The danger is that carbon markets will not wean society from extracting, processing and burning fossil fuels, nor will they reduce real emissions. They simply lock-in fossil fuel use under the guise of responding to the greatest threat humanity has faced.

California is host not only to one of the most high profile carbon market experiments in the world, it is also host to one of the largest petro-chemical refining and processing centers on the Pacific Rim. The crude reality of oil supply sourcing for California’s refinery sector is that the carbon market is allowing fossil fuel climate pollution to continue.

The California Energy Commission provides a summary of “crude oil supply sources to California refineries” each year, derived from data gathered by the U.S. Energy Information Agency.  The data show that both crude oil throughput (the amount of crude oil entering the refineries) and real emissions in California have increased in the refinery sector under cap-and-trade—even though industry pollution sources are successfully complying with the market-based mechanism.

The crude reality is that California’s refinery sector sourced more crude oil in 2018 than in any single year since the Great Recession of 2008. After several years of persistent decline, crude oil extraction in California saw a small increase in 2018. A new record for foreign crude oil imports, as well as still sourcing significant sums of crude extracted from the endangered landscapes of Arctic Alaska, was also set that year.

The Arctic, where temperatures are rising twice as fast as in other parts of the world, is not the only endangered landscape threatened by oil drilling for California refineries. Last year one in 10 barrels of oil refined in California came from the western Amazon (the region that’s been on fire and in the news all summer) and other tropical regions. Oil exploration and extraction is a leading cause of tropical deforestation, which is itself another major source of greenhouse gas emissions.

Saudi Arabia remains the largest single source of foreign crude oil delivered to California’s refineries. All Middle Eastern sources combined makes up for more than 40 percent of the foreign crude oil refined in California.

The 2017 passage of AB 398, which made the market-mechanism the only legal source for addressing carbon emissions from major oil and gas refining and production facilities, locks the state into a fossil fuel economy by perpetuating the fantasy that increased petroleum processing is compatible with climate action.

Instead of further enriching carbon traders and polluting industries, California needs to demonstrate real climate leadership by pursuing immediate direct emissions reductions from all sources—especially from fossil fuels—as the only real solution to the global climate crisis.

Gary Hughes is California Policy Monitor, under Biofuelwatch’s Global Justice Ecology Project.