Cap & Invest in Washington State

Shorter Answer

False. Transportation emissions can be more costly to reduce than other sectors at present, notably the power sector.  However, fuel suppliers have been a part of California’s program since 2015, and transportation fuels are part of the collective reduction in capped emissions through both direct reductions and through facilitating reductions elsewhere.  As the cap becomes more stringent the longer the program is in place, the more likely it is that direct emissions reductions from fuel supply will be a major driver of emissions reductions.

Transportation electrification is the largest investment recipient from California Auction proceeds, including 25% of revenues to the California High-Speed, and 42% of the remaining allocated funds towards Transportation projects of which vehicle electrification is a primary focus.

More detailed answer

Fuel suppliers have been a part of the cap program since 2015 (Phase 2).  They were not included for the first two years of the program (Phase 1). There are some exemptions, notably flight emissions for interstate travel (intrastate is included).  However, by and large, transportation fuels are part of the collective reduction in capped emissions either through direct reductions or through facilitating reductions elsewhere.

There is another component of the California cap program, which is the use of auction revenues.  The largest single recipient of auction proceeds as part of the original system design is the California High-Speed Rail (by statute, HSR receives 25% of auction revenues).   This option for travel can be expected to replace road (personal vehicles, buses) as well as intrastate flights. The California High-Speed Rail Authority estimates that the high-speed rail project will eliminate over 70 Million metric tons of GHGs over the next 50 years.  Roughly $2 billion has been allocated thus far with eventual system costs expected to reach $64 billion.

Aside from High-Speed Rail, funds are allocated on an annual basis at the discretion of the Greenhouse Gas Reduction Fund.  These represent the 75% of auction revenue not allocated by statute to the high-speed rail project. Total allocated funds separate from High-Speed Rail reached $6.9 billion by the end of 2019 of which $2.7 billion had been implemented.  This encompassed over 343,000 projects with 70% of the funding estimated to benefit priority populations.

Focusing on Transportation projects alone (excluding the separate allocations for high-speed rail), over $2.9 billion was allocated through 2018 (42% of the non high-speed rail total) with over $1.5 billion implemented (56%).  The implemented funds are projected to reduce over 12 million metric tons of GHGs at an average cost of $126/tCO2e.  

Non-transport, Greenhouse Gas Reduction Fund allocations are projected to be cheaper, at an average of $50/tCO2e.  This reflects that, at present, whether through a tax, investments, or regulation, transport emissions tend to be more costly to reduce than emissions from other sectors.  However, it is clear that the investments are making a dent and the cap is driving fuel suppliers to be part of the collective solution even before the investments are considered.

Both the cap and investments will be more critical should the Trump administration get it’s wish to restrict California from setting its own, more stringent fuel economy standards.