It starts at the corner gas station. California’s cap-and-trade program requires fuel wholesalers, along with other big industrial firms, to purchase emissions allowances in order to generate carbon. In addition, fuel producers – from giant oil refiners to ethanol manufacturers – must purchase a separate type of credits to comply with the state’s “low carbon fuel standard,” which penalizes companies that spew lots of carbon during the production process.
Those costs get passed along to motorists. The total impact is about 15 cents a gallon, according to figures compiles by UC Berkeley energy economist Severin Borenstein.
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