California is Falling Behind Its Climate Goals. Big Oil Wants to Help.

California isn’t just at the forefront of climate policy; it’s also leading the way when it comes to contending with climate change, as rising temperatures and increasing aridity threaten water reservoirs while carbon emissions from wildfires exceed those of the entire industrial sector or electrical grid.

Yet, just as the climate crisis worsens in the state and around the globe, California is falling behind its own climate goals and ceding its role as the trendsetter in sustainability initiatives.
 

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That slowdown is due in part to the powerful influence of the oil and gas industry, which has been able to kill legislation aimed at accelerating the state’s efforts to reduce emissions and to pressure the state to continue production of fossil fuels. In addition, climate advocates point to the challenges inherent in scaling renewable technologies and to inadequate investment in everything from zero emissions vehicles to sustainable land management.

“We buy the level of emissions reductions that we want, or we’re willing to pay for,” according to Benjamin Preston, one of the authors of a recent International Panel on Climate Change report that laid out in stark detail the urgency of the climate crisis and a senior policy researcher at the RAND Corporation based in Santa Monica.

Paradoxically, the fossil fuel industry is stepping in to fill the gap, pushing its own technologies to help reduce emissions so that the industry can profit off the transition to a greener future. Some of its solutions, like renewable natural gas, biodiesel, and carbon capture technology, are expected to require massive investments to scale unproven technologies and still pose substantial risks to the climate and public health.

Even as the crisis worsens worldwide, California still has an opportunity to model what efficient, large scale and just climate change adaptation and mitigation can look like, experts said.

“The bones of this transition are there,” said Tim O’Connor, a senior attorney in the Environmental Defense Fund’s energy program. “The muscle is really being put on the skeleton to make it happen, but we don’t have the full scope of the solutions in place right now.”
 

Falling Behind

The state’s slowing climate progress became really concerning over the last couple of years, according to F. Noel Perry, a venture capitalist and philanthropist who founded the organization Next 10, which produces future-oriented briefs on climate policy.

“We were ahead of most states and most countries in terms of what we were doing,” Perry said. “But then over the last few years, we realized that we weren’t reaching our goals.”

California has vowed to achieve a 40% reduction in planet-warming emissions from the 1990 level by 2030, but to reach that goal the state will have to turbocharge its efforts, per Next 10’s most recent California Green Innovation Index. The state is moving so slowly that, based on the average rate of reduction over the last three years, it’s estimated to not reach that 40% goal until 2063 and to not reach a 2050 goal of achieving 80% emissions reductions from the 1990 level until the year 2111.

In comparison to 2030 targets set by several other states, the federal government and European countries, California is behind the times, said Barry Vesser, chief operating officer at the Climate Center.

Last year the Climate Center sponsored a bill, SB 582, in the Legislature that would have doubled the state’s 2030 emissions target to 80%. When it went through the Senate Appropriations Committee, the bill’s author, Sen. Henry Stern, reduced the figure to “40% and up to 80%.” Evan Goldberg, a spokesperson for Stern, didn’t respond to Capital & Main’s questions.
 

Problem areas statewide include a slowing adoption of renewable energy for power, underwhelming cuts to vehicle emissions and a stubborn dependence on natural gas.

 
Those higher targets can send “strong signals to agencies and markets that this is where the economy is going,” Vesser said, citing the participation of the country’s most populous state in markets for renewable energy and low carbon fuel.

Problem areas statewide include a slowing adoption of renewable energy for power, underwhelming cuts to emissions from vehicles and a stubborn dependence on natural gas, which causes planet-warming emissions.

The three factors are also linked to the fossil fuel industry’s insistence that it play a role in a greener future. While acknowledging that its oil and natural gas products are hurting the planet, the industry says that it wants to be part of the solution, making the case for major public investments in scaling up industry technologies — which could translate into billions in profits for oil and gas companies — which climate advocates say are unnecessary since such efforts could be bypassed by economy-wide electrification generated by renewable power.

California’s biggest success has been the electric grid, where emissions fell 37% for electricity generated in-state and 53% for imports since 2000. The state has added enough solar and wind energy to power roughly 25 million homes over the last decade, and in 2020, half of California’s electricity came from sources that don’t emit carbon.

That was low-hanging fruit; California will have to build six gigawatts of new solar, wind and battery storage resources annually until 2045, according to a joint agency report, sustaining a record-breaking rate for the next 25 years. Extreme weather will also put stress on the grid.
 

Slowing Renewables on the Grid

The impacts of climate change forced the state to fall back on natural gas for electricity due to extreme heat and wind in 2020 — the first year since 2013 that California added more natural gas plants than any other power source. Solar and wind are still too intermittent to be reliable in emergencies, and hydroelectric power is limited by drought.

The industry wants gas to play a crucial role. In a pair of comments submitted to the California Public Utilities Commission for a rulemaking process about future natural gas infrastructure, investor-owned gas utilities and the Western States Petroleum Association contended that while California is statutorily mandated to eliminate emissions, that doesn’t necessarily mean the elimination of fossil fuels entirely.

That stands in stark contrast to the approach favored by climate and environmental groups that promotes electrifying appliances in existing buildings and eliminating gas hookups in new ones, which the state has identified as among the most cost-effective ways of cutting the emissions that come from buildings. Such emissions account for 10%-15% of the total.

SoCalGas, the largest natural gas utility in the state and subsidiary of Sempra, acknowledges that the future will include more electric buildings but advocates various approaches to keeping what it calls “clean fuel” — such as hydrogen, biomethane gas captured from dairy manure or synthetic gas that uses captured carbon — central to heating, cooking, showering and other essentials, as well as for fueling heavy trucks and planes. The company claims those are the most affordable options.
 

More than 100,000 homes are constructed in California each year, with hundreds of millions of dollars in subsidies in place for natural gas infrastructure.

 
But the state has been saying the exact opposite. According to a government report, building electrification relies on technologies already in use, while renewable fuels haven’t been demonstrated at scale and are thus financially riskier. SoCalGas and other utilities are still trying to demonstrate that hydrogen can move through existing natural gas infrastructure. Additionally, renewable gasses can be made in ways that pollute the air and warm the planet.

The debate has heated up in recent years. The agency behind that report, the California Energy Commission, was sued by SoCalGas, which accused it of violating a law to “maximize the benefits obtained from natural gas as an energy source.” The law is from 2013, and natural gas has since been recognized by the U.N. as a major source of emissions because it’s made of methane, a potent greenhouse gas.

“Every home that gets connected to the gas system and every natural gas vehicle sold or infrastructure installed is expanding the use of gas,” according to Sage Welch, founder and executive director of Sunstone Strategies, a public relations firm focused on climate change.

More than 100,000 homes are constructed in California each year, with hundreds of millions of dollars in subsidies in place for natural gas infrastructure. As more homeowners opt to electrify, there will be fewer ratepayers for the gas utilities over time, increasing the cost for gas. This burden will fall mostly on lower income homeowners who can’t afford to electrify quickly, as well as on renters.

This year, Gov. Newsom is proposing a budget with nearly a billion dollars for retrofitting homes with electric heat pumps to replace gas-fired heaters and air conditioners, and two separate agencies are considering or recommending more investments and incentives for similar transitions by 2030.
 

The Need for Car Charging Stations

A future powered by renewable energy will heavily depend on major investments and upgrades for the state’s aging transmission infrastructure — which will also be essential to electrifying cars and trucks in the state, another area in which climate advocates say the state is falling behind.

The state’s utilities commission has sought to assure critics that existing transmission infrastructure is enough to support the electrification of 11.6 million homes over the next decade. In its 20-year horizon, the California Independent System Operator — a nonprofit that manages the flow of electricity in much of the state — says the state’s transmission systems need $30.5 billion in investments in high-voltage lines to carry wind power from offshore and other states as well as other upgrades.

The bulk of California’s emissions come from transportation, and the state has made zero emissions vehicles a primary focus. This year, Gov. Newsom’s administration is proposing $2.3 billion in expanded incentives and infrastructure for zero emissions cars, trucks, buses, the state’s ports, and offroad vehicles as part of a larger multiyear, $6.1 billion investment through 2026.
 

California’s oil and gas industry has tried reshaping the agenda away from electric vehicles and toward hydrogen fuel cell vehicles, in which companies like Chevron are heavily invested.

 
The California Air Resources Board wants 85% of cars and 77% of trucks to be emissions-free by 2045. The latter tracks with corporate pledges by companies like Walmart and FedEx to replace gas-powered trucks with zero emissions fleets. The state will also receive federal funds as part of a $5 billion investment for national electric vehicle charging infrastructure.

Eliminating vehicle emissions is essential, and California is ahead of the curve, say experts, who also emphasize that adoption of zero-emission vehicles needs to be even faster.

“Unless we get to a point where charging stations are just as ubiquitous as gas stations, it’s going to be very difficult to hit the adoption saturation levels that we really need in order to kind of get the transportation sector greenhouse gas emissions to where they need to be,” according to Colleen Kredell, director of research at Next 10.

California’s oil and gas industry has already tried reshaping the agenda away from electric vehicles and toward hydrogen fuel cell vehicles, in which companies like Chevron are heavily invested. The Western States Petroleum Association even launched a public relations campaign questioning the state’s electrification goals and opposed legislation to build electric vehicle chargers.

WSPA is also pushing the California Air Resources Board to equalize energy efficiency credits for hydrogen fuel cell and electric cars. Currently, builders of EV chargers receive more credit than builders of hydrogen refueling stations, but one expert said it’s because EV batteries are more efficient than fuel cells, which waste energy pressurizing the hydrogen.
 

It’s not clear whether California’s lands can sequester more carbon than they emit on balance as the wildfire problem continues to worsen.

 
The industry has also used lawsuits to promote its solutions. The California Natural Gas Vehicle Coalition, which includes Chevron and SoCalGas, sued CARB two years ago, claiming that it was unfairly putting natural gas at a disadvantage in its clean truck rule. The judge ruled in the state’s favor, but the coalition has successfully promoted natural gas trucks as replacements for diesel and won smog check exemptions.

CARB forecasts a growing use of renewable fuels alongside vehicle electrification; already, a refinery in the Bay Area is seeking permits to refine biomass into biodiesel.

Another way the oil and gas industry is maneuvering so it will be seen as a solution to climate change is by deploying carbon capture technology as part of the state’s climate mitigation portfolio — which could lead to more lucrative government subsidies.
 

Natural and Engineered Carbon Capture

Sequestering carbon will be necessary to avoid increased warming of the planet, and climate advocates in California point to natural carbon sinks like forests, wetlands and oceans as solutions. Still, it’s not clear whether California’s lands can even sequester more carbon than they emit on balance as the wildfire problem continues to worsen.

There’s about 5.3 billion metric tons of carbon locked in California’s land mass. Roughly half is in soils and the other half in plant biomass, and forests accounted for the vast majority of carbon stock, with shrublands a distant second.

Unplanned fires emitted an annual average of 14 million metric tons of carbon into the atmosphere since 2000, while millions more were emitted from other landscapes due to drought, poor land management, coastal erosion and more. In 2020 alone, wildfires released 112 million tons of carbon into the air — about a quarter of the total the state was supposed to emit in 2020.

The state doesn’t include these numbers in its economy-wide emissions count and is proposing different strategies to address them. This year the Newsom administration is proposing a total of $2.7 billion for long-term forest fire resilience, including fuel removal, vegetation management, and expanding home hardening programs.

It doesn’t propose new investments for nature-based sequestration, but last year’s budget committed $1.4 billion over three years for a broad range of “nature-based solutions” to climate change, including lands preservation, wildfire and drought resiliency, and community greening.

By contrast, the state should be investing $5 billion a year on the low end, according to Laurie Wayburn, co-founder and president of the Pacific Forest Trust.
 

Engineered carbon capture carries risks, including the construction of heavy infrastructure near low income neighborhoods already overburdened by air pollution.

 
“And frankly that’s cheap,” she said, arguing that restoration of forests in the state’s watersheds — which provide the majority of the state’s water — could also soften the impacts of severe drought. “If we invest in restoration of those forests … we’d do that in a way that actually pays back that $5 billion because we would be employing more people.”

One bill recently introduced in the Assembly mandates that the state naturally sequester 60 million tons of carbon by 2030. Another one would direct the state to develop a framework for the ongoing regulation of oil and gas industry-engineered carbon capture, storage and sequestration, which uses machinery to suck up and store carbon underground.

Engineered carbon capture carries risks, say environmental advocates, including the construction of heavy infrastructure near low income neighborhoods already overburdened by air pollution. It has also had limited deployment with poor results, and presents serious public health risks if pipelines carrying liquefied carbon rupture.

“We want to ensure it’s not going to become a license to extend our dependence on fossil fuel infrastructure or divert public investments away from more worthy investments,” said Max Baumhefner, a senior attorney with the National Resources Defense Council.

There are no carbon capture projects in operation in the state, though many existing facilities have the potential to be retrofitted. At least two pending projects are backed by oil and gas companies.

One of them, with Chevron’s investment, involves restarting a biomass plant near Fresno to generate electricity, capturing the carbon and then storing it underground. Another in Kern County will deliver carbon captured from a gas fired power plant owned by California Resources Corporation to underground oil formations in the company’s nearby field, helping the field produce more oil.

California Resources Corporation believes this will lower the carbon intensity of both the gas electricity the plant generates and the oil its field produces, but this double counting is exactly the problem with using carbon capture for emissions reductions that experts have objected to.
 

Regeneration and Restoration

The state’s cap and trade program — in which companies buy and trade pollution allowances equal to how much they plan to emit — is intended to be the single largest driver of reductions by 2030, but there’s growing evidence that the program is off track because polluters have “banked” too many of the permits that allow them to emit greenhouse gasses.

CARB says any reforms could cause a surge in the price of permits at future auctions, threatening state revenues. The agency won’t release more detailed findings until late 2023. The oil and gas industry had a heavy hand in shaping the program and receives most of the free permits the state allocates to industrial polluters. But the state’s revenues from the program have been increasing over time, hitting nearly $2 billion in the third quarter of 2021 alone.

And cap and trade revenues — cumulatively, at least $14.9 billion — have become a critical source for all sorts of climate investments. For example, this year the governor’s budget is proposing $676 million from cap and trade to expand infrastructure for zero emissions heavy trucks. (A spokesperson for CARB told Capital & Main that achieving emissions reductions, not maximizing revenues, was the agency’s primary goal.)

It’s also been a source for $1 billion to address air pollution in low income communities of color. But avoiding reforms to the system by tying revenues to environmental justice aims is “perverse,” says Catherine Garoupa White, executive director of the Central Valley Air Quality Coalition.

“The reality is that the programs should be paid for regardless of where the money comes from — it is literally restitution for communities that have been exploited, criminalized, murdered and disinvested in for decades,” White wrote in an email.

Many of the state’s poorest residents already endure extreme heat, drought and industrial pollution, and for them, dangerous thresholds “have already been crossed,” said Martha Argüello, executive director of Physicians for Social Responsibility-Los Angeles.

“Our solution has to be rooted in regeneration and restoration,” Argüello said during a webinar about engineered carbon capture.

Policies that don’t account for increasingly pessimistic climate forecasts are indicators of our society’s values, especially as the effects of climate change bear down on the most vulnerable, said Ben Preston, the IPCC report author.

“It’s not that the science is out of balance, or the policy is out of balance with the science,” Preston said. “It’s more like our values are out of balance with the science and the policy.”

 
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