Cap and Trade for Fuels

CARB’s New Hidden Gas Tax Could Add Up to 76 Cents per Gallon to Fuel Costs

The cap-and-trade for fuels is a regulation already adopted by the California Air Resources Board that will increase the cost of gasoline and diesel fuels by up to 76 a cents a gallon, according to the agency’s own analysis!Hiddengastax Twitter infographic - FINAL 1

And those costs won’t stop at the pump – they’ll increase the cost of everything that uses gasoline and diesel to transport products to market, including everyday essentials like food and medicine.

By extending the multi-billion dollar cap-and-trade program to transportation fuels, CARB’s hidden gas tax will go into effect on January 1, 2015 – just 6 months from now!

Everyone Pays

This hidden gas tax will hurt middle and low-income families and small businesses the most, and will make it more expensive for local governments and school districts to provide public safety, ambulances, school transportation and other services upon which Californians rely.

The Facts about Cap-and-Trade for Fuels

California’s cap and trade regulations have applied only to large industrial facilities and not gasoline and diesel.  That will change next year, when AB 32 regulations for the first time cover gasoline and diesel.

What does this mean? Unless changed, California fuel providers (refiners and importers) will be required to purchase carbon allowances or permits for every gal

Cap and trade for fuels

lon of gasoline and diesel fuel they sell in California.

When does it take effect? January 1, 2015

Who will pay it? According to the Air Resources Board, these additional costs – on top of other climate change and regulatory costs – will most likely be reflected in prices paid by consumers of gasoline and diesel fuel.

How much will it cost? According to the California Air Resources Board and others, bringing gasoline and diesel fuels into the cap and trade program will cost a minimum of $2 billion, or about 12 cents per gallon initially. And those costs are expected to increase over time.

What is it for? Combustion of gasoline and diesel in cars and trucks represents 38 percent of all greenhouse gas emissions in California.  Bringing fuels into the cap and trade program is expected to raise the cost of those products and discourage consumption of petroleum fuels.

How is the cost of the program determined? The cost to fuel providers will be determined by government-run auctions at which companies and individuals buy and sell carbon allowances.  The current minimum price of those allowances is about $12 per ton.  But those costs could fluctuate widely if there is a shortage of allowances or if one or more traders purchases large volumes of allowances and elects to withhold them from the market.  Experts say the volatile nature of carbon trading markets could result in price spikes of $1 per gallon or more.

What does the cap do? The cap will steadily reduce the total emissions from cars and trucks using gasoline and diesel in California. The cap places a hard limit on how much gasoline and diesel can be sold. If robust economic growth occurs, the cap could prevent the sale of gasoline and diesel, even if demand calls for more gasoline and diesel consumption.

Cap and Trade for Fuels Factsheet

Read the letter 30 taxpayer, consumer and business group sent to Governor Brown opposing expansion of the cap-and-trade program to include fuels here.