Otis Matthews pumps gas into his car at the Valero gas station on Riverside Drive and Montopolis Drive on Monday, May 16, 2022. Average gasoline prices have jumped above $4 a gallon in Austin for the first time as fuel costs reach record highs in Texas and nationwide. Gas Prices Mlc 0014
Sacramento, California – As President Donald Trump once again challenges California’s authority to set ambitious climate standards—most recently by revoking the state’s electric vehicle targets—pressure is now emerging from within the state’s own Democratic ranks to rein in one of its signature climate programs: the low-carbon fuel standard (LCFS).
On Tuesday, credit prices in the LCFS market fell sharply after seven Democratic state senators introduced SB 237, a bill that would cap the cost of compliance credits at about $75 per ton. For a policy designed to let prices rise to nudge fuel producers toward cleaner energy alternatives like biofuels and electricity, the proposed cap represents a dramatic shift.
The proposal of a cap isn’t coming from the party’s conservative wing alone. Senate President Pro Tem Mike McGuire has given his blessing to the proposal, and supporters include both moderate and progressive lawmakers—among them, Berkeley’s former mayor Jesse Arreguín and Jerry McNerney, a freshman state senator and former congressman once known in D.C. as “the science guy.”
“This critical legislation will reduce costs for drivers across the Golden State,” McGuire said, framing the move as a pragmatic response to California’s stubbornly high gas prices.
The bill proposes more than just a cap. It would push state regulators to reconsider California’s uniquely formulated gasoline blend, which some experts argue has outlived its usefulness. It would streamline environmental permitting for fuel refiners and increase state oversight of policies that affect fuel prices—creating, in effect, a broader rethink of how climate goals intersect with consumer costs.
The political implications are complex. Environmental justice advocates, often critical of the LCFS for subsidizing methane capture on industrial dairies, support the legislation. So does at least one current member of the California Air Resources Board, Dean Florez, who called the measure “a reality check.”
“When credit prices spike so high they quietly tack 85 cents onto a gallon of gas,” Florez said, “people stop believing that the green future includes them.”
But others in the environmental community fear the state is undermining itself just as federal threats escalate.
“Why would we handcuff ourselves by not using a key policy to address transportation, the single largest emitting sector in California?” asked Katelyn Roedner Sutter of the Environmental Defense Fund.
For Governor Gavin Newsom, the legislation is a delicate political balancing act. His administration has aggressively challenged oil companies while simultaneously working to retain refining capacity after two facilities announced plans to leave the state. Newsom’s office did not respond to a request for comment.
Ultimately, SB 237 has become more than just a bill about fuel prices. It’s also a bargaining chip in California’s broader climate negotiations—particularly in the fight over reauthorizing the state’s cap-and-trade program. Advocates see the LCFS cap as a potential tradeoff to weaken industry resistance to deeper structural reforms.
Whether that strategy succeeds—or further fractures California’s climate coalition—may shape the state’s environmental legacy in the decade ahead.
