Draft State Budget Includes More than $22B to Address Climate Crisis

By Published On: January 11, 2022

In his newest outline for the California state budget, Gov. Gavin Newsom proposes spending $22.5 billion to slash climate pollution from the transportation and energy sectors, and to address wildfire, with a focus on overburdened communities. The administration released the $286.4 billion state budget plan for 2022-23 on Jan. 10.

“Climate change is changing everything in our state and around the world,” Newsom said about his priorities for spending public money.

Thanks to another projected budget surplus of nearly $46 billion, the blueprint includes more money for clean energy jobs, training and education, and offshore wind development. The California Energy Commission budget would soar to an unprecedented $3.8 billion, according to the CEC Chair. The spending plan also would provide $100 million in tax credits, over three years, to advance lithium extraction from geothermal plant brine in the Salton Sea and help create a battery manufacturing hub. This first-time tax credit also would advance other emerging alternative energy technologies.

Another budget first is $100 million to reduce the cost of hydrolyzers that use renewable energy to split hydrogen from water to create green hydrogen. Since hydrogen is effectively stored energy, some say it could be used in long-term energy storage and to run power plants and vehicles.

A number of clean air and environmental equity advocates embraced the first cut of the climate-friendly budget.

The Clean Air Coalition applauded Newsom’s “focus on equity, providing employment, environmental and transportation opportunities for disadvantaged Californians who have too often been left behind.” Bill Magavern, the Coalition’s policy director, also said investments in clean trucks, buses and cars, industrial decarbonization, green hydrogen, and offshore wind “together represent an unprecedented commitment to a safer climate for all Californians.”

The Climate Center CEO Ellie Cohen, however, called for increased climate spending, including $1 billion in community energy resilience planning and development because of increasing power outages. She also urged a halt to all oil and gas drilling permits, and for a required 3,200-foot setback to protect communities from the pollution spewed from the wells.

The first draft of the budget not only proposes spending $6 billion over five years to accelerate the adoption of large and small electric vehicles, but also includes $9 billion for other low-carbon transportation initiatives, $2 billion for clean energy infrastructure, and investments in community resilience.

$6B for ZEVs over five years

The $6.1 billion to advance zero-emission transportation, aimed at meeting Newsom’s order to end the sale of fossil-fueled cars in 2035, is allocated as follows:

  • $900 million to expand affordable charging stations in low-income neighborhoods.
  • $256 million for low-income consumer purchases of zero-emission vehicles.
  • $935 million to add 1,000 zero-emission short-haul (drayage) trucks and 1,700 zero-emission transit buses.
  • $1.5 billion for electric school buses to keep students from breathing in dirty diesel pollution.
  • $400 million to enable electrification of ports to cut down high levels of toxic diesel pollution emitted from ships and short-haul trucks.
  • $419 million to support low-income, community-based transportation projects to encourage safe biking and walking and other alternatives to individual car use; and,
  • $200 million for pilot projects in high carbon-emitting maritime, aviation, rail, and other off-road applications, plus vehicle-to-grid technologies.

Funding for clean storage

The budget plan allocates $2 billion, over two years, for clean stationary power with $380 million to develop storage facilities that provide up to eight hours of power during grid emergencies and complement solar and wind energy. In addition, there is:

  • $240 million over two years for the Oroville Pumped Storage facility. The funds would be used to allow a pumped-storage project to operate at greater capacity for the benefit of the grid.
  • $210 million for grants to reduce carbon emissions and toxic pollution from industry in disadvantaged communities.
  • $85 million in 2022-23 to increase energy efficiency and renewable energy at California food production facilities; and,
  • $45 million over the next fiscal year to deploy offshore wind energy in federal waters off the coast of Humboldt and Morro Bay.

Building electrification

The budget plan also provides nearly $962 million over two years for “critical investments,” largely to increase building electrification. It is divvied up as follows:

  • $622.4 million for electrification of appliances and weatherizing of low-income housing.
  • $300 million for consumer rebates for building upgrades, such as to replace natural gas-powered equipment with electric appliances; and,
  • $40 million to accelerate the adoption of ultra-low-global warming potential refrigerants.

Fire prevention would get $1.2 billion over two years, with $400 million for CalFire firefighters and the rest for aircraft to reduce wildfires and improve forest health.

There is $175 million over the next fiscal year to continue building resilience to the impacts of extreme heat across California. 

$100 M tax credit for emerging technologies

The new proposed $100 million tax credit would help develop California-based green energy technologies, including lithium extraction for battery development at the Salton Sea, with the aim to create high-paying jobs in the impoverished and polluted Imperial Valley. “Experts estimate the region could satisfy more than one-third of today’s global lithium demand,” according to the budget plan.

If this and or other emerging carbon-free technologies are successful, the budget language requires that Californians reap some of the gains from commercially successful innovations. The tax credit will be awarded by a newly-created clean energy board at the Governor’s Office of Business and Economic Development. It is in addition to the existing Research & Development credit.

There also is potential funding of $185 million for climate-related research and development, workforce development and training. Of that amount, $100 million is for climate crisis research and matching grants for researchers from the UC system and other institutions, $50 million for regional climate innovation incubators, and $35 million to establish climate workforce training hubs.

Another $50 million is for a pilot program to help displaced oil and gas workers as the fossil fuel industry in the state shrinks.

The Climate Center called for $450 million to help those who have lost jobs in the fossil fuel industry.

The blueprint includes $200 million over two years to plug and remediate contaminated orphan oil and gas wells.

The legislature will debate the governor’s proposed budget over the next few months.

“We’re excited to work with the Legislature to prove to the rest of the country that, when leaders are intentional about equity, we can not only advance our climate agenda, we can also dismantle systemic racism and address the lasting effects of redlining,” Alvaro Sanchez, vice president of policy at The Greenlining Institute, stated.

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