California is spending $54 billion over five years on climate: around $6 billion for electric vehicles; over $8 billion to decarbonize the state’s electrical grid, which is dependent on natural gas for 32 percent of its power; nearly $15 billion to improve public transit; and over $5 billion to reduce the risk of wildfires and for drought resilience programs. The legislation passed September 1 dedicates taxpayer money for the state’s “energy transition.” Two reactors at the California’s Diablo Canyon nuclear power plant that generate 9 percent of the state’s electricity will remain open until 2029 and 2030, respectively, to help stabilize the state’s electric grid that is highly reliant on intermittent solar and wind power. The state’s earlier plan was to shutter them 5 years sooner but California is struggling to keep the lights on due to a heat wave and needs the electricity from the nuclear plant. The legislation codifies new benchmarks to get California to 90 percent non-carbon electricity by 2035, 95 percent by 2040, and 100 percent by 2045. The new climate legislation follows state air regulators’ decision to phase out new gas-powered car sales by 2035.
The bill also contains new restrictions on oil and gas drilling in the state—the seventh largest producer of oil in the United States. It includes a requirement that new oil and gas wells or wells that are being reworked be set back at least 3,200 feet from homes, schools and hospitals, and imposes strict pollution controls on existing wells within that distance. Companies with existing oil and gas wells within the buffers are required to monitor emissions, control dust and limit night-time noise and light. It is estimated that about 2.7 million Californians live within 3,200 feet of the existing oil and gas wells. While the oil and gas industry supports local setbacks, according to the Western States Petroleum Association, a one-size-fits-all for the entire state is not the way to legislate because it does little to protect health and safety, and will make the United States more dependent on foreign oil and increase costs for fuel and energy. California produces less than 1 percent of the oil it consumes daily and imports oil mainly from Ecuador, Saudi Arabia, Iraq and Colombia. The state was also importing oil from Russia (3.5 percent of its demand) before the sanctions were instituted that stopped those imports due to Russia’s invasion of Ukraine.
Under the new legislation, the state is required to cut greenhouse gas emissions at least 85 percent by 2045 while offsetting any remaining emissions by planting more trees or using emerging technologies such as carbon capture and storage, which traps carbon dioxide and buries it underground. The legislation, however, would ban the use of captured carbon dioxide for extracting more oil.
The legislature also contains a $1,000 refundable tax credit (a cash payment to those who do not pay taxes) to low-income Californians who do not own cars. The provision is designed as a reward and an incentive for living without a car. California lawmakers also approved several new bills to encourage denser housing in cities and to lift requirements that new homes built near bus or train stops include parking spots. The State’s official position is they prefer people to live densely and use public transportation.
One of Governor Newsom’s priorities regarding greenhouse gases failed in the Assembly. That legislation would have set a target of reducing greenhouse gas emissions by 55 percent below 1990 levels by 2030, expanding the current goal of 40 percent over the same time period. That provision may have failed because the state is not on track to meet its current 2030 target. It is estimated that California will miss the target by several decades.
California Is Not on Track to Meet 2030 Emission Reduction Goals
Between 2017 and 2019, California averaged a greenhouse gas emission decrease of 1.3 percent per year–far below the amount that is needed to meet California’s greenhouse gas emission reduction goals for 2030 and 2050. Assuming the same three-year average rate of reduction from 2017 to 2019 (-1.3 percent), California will reach its 2030 and 2050 goals in 2063 and 2111, respectively. In order to meet the 2030 goal, the state would have to reduce its emissions by 4.3 percent each year from 2019 to 2030–more than triple the reductions recorded in the 2017 to 2019 period.
The single-biggest contributor to the state’s emissions is the transportation sector, which accounts for 40.7 percent of the emissions in the state. In 2020, the shift to work from home due to the COVID lockdowns resulted in a nationwide emissions drop of 15 percent. California may see a similar decline resulting in a larger drop in emissions in 2020 and 2021 than in the 2017 to 2019 period, but the data are not yet available.
California’s commercial and residential sectors also increased the amount of emissions produced. From 2014 to 2019, commercial greenhouse gas emissions increased from 4.8 percent to 5.8 percent, while residential emissions increased from 6.1 percent to 7.9 percent.
Although California has met its target goal of 33 percent renewable energy by 2020, renewable energy growth slowed in recent years. In 2020, the state added more gas power capacity (1.5 gigawatts) than any other source, including solar (1.3 gigawatts). Electricity generation from wind, solar, geothermal, biomass and hydroelectric sources decreased in 2020, making up 45.3 percent of the state’s power mix, down a full percentage point from the year before. To meet California’s goal of 50 percent renewable energy by 2026, the state’s share of electricity generation from renewables would need to increase by 2.8 percent annually. But the percentage of California’s total power mix from renewable energy increased just 1.4 percent in 2020 — driven largely by the retirement of fossil fuel power plants rather than the addition of new renewable energy sources.
Critics of California’s program believe that California regulators are putting too much faith in its cap-and-trade program that imposes a ceiling on emissions from large companies and allows them to buy credits to offset their emissions. The program has been in place for a decade.
Conclusion
Biden’s climate/tax bill, the so-called Inflation Reduction Act, will not meet his emissions goals and as such he has called on states to do more. California is heeding his request and has put together the elements of a climate package through the various pieces of legislation mentioned above. But, California’s push to intermittent renewable energy is not providing sufficient and reliable energy for the state to get through its Labor Day weekend heat wave, requiring Californians to conserve. For that reason, California is keeping its remaining nuclear reactors online for at least an additional 5 years. But, it is also spending an additional $54 billion on other climate actions and is incorporating setbacks for new oil and gas wells that are bound to increase energy prices. It is also not meeting its current emission reduction goals. For instance, its 2030 goal will not be reached until 2063 if the 2017 to 2019 emission reduction rates continue. A number of other U.S. states are tied to California’s leadership, but they should note that it is “do as I say” and “not as I do” with regard to the state’s achievements.
