Home News Jobs, Cost, Feasibility: A Look At California’s Energy Transition

Jobs, Cost, Feasibility: A Look At California’s Energy Transition

California has set ambitious goals for phasing out fossil fuels in favor of renewable energy sources across the state’s power production grid, commercial operations and consumer vehicles. What will this energy transition look like, who is involved and how long will it take? The Long Beach Business Journal consulted numerous studies and research papers, as well as industry experts, to find out.

THUMS Oil Islands
With its ambitious climate goals, California is spearheading the transition toward renewable energy in the nation, but experts say the state’s timeline for achieving them is jumping ahead of available technology. Pictured is one of the Long Beach THUMS Oil Islands, where trees and false buildings mask shoreside oil infrastructure from beachgoers. (Photograph courtesy of Long Beach Energy Resources)

Employment

The renewable energy market is ripe with employment opportunities. According to a study by the International Renewable Energy Agency (IRENA), the renewable energy sector already employs an estimated 11 million people worldwide, with room to grow as the industry’s share of the world’s electric power mix expands. “Southern California, being the big economic engine that it is, could play a big role when it comes to those jobs,” Greg Roche, vice president of renewable gas provider Clean Energy Fuels, told the Business Journal.

A study by the Brookings Institute’s Metropolitan Policy Program found that wages in the clean energy sector – which researchers defined as the production of energy that is not derived from fossil fuels – exceed average national wages by up to 20%, depending on the occupation studied. Education requirements are also lower, the study found, especially in the industry’s energy production and energy efficiency sectors. As a result, workers with lower educational attainment can achieve higher wages than their similarly educated peers in other industries.

But there’s still work to be done in terms of inclusion. “The clean energy economy workforce is older, dominated by male workers, and lacks racial diversity when compared to all occupations nationally,” a summary detailing the study’s findings stated. Less than 20% of workers in the clean energy production and energy efficiency sectors are women, and black workers make up less than 10% of the workforce.

Catherine Reheis-Boyd, president of the Western States Petroleum Association (WSPA), noted that even companies traditionally focused on fossil fuel for energy production have expanded their portfolio of renewable production sites. “What we do are clean energy jobs,” Reheis-Boyd noted, pointing toward BP’s wind operations spanning 11 sites in 10 states as an example. “These are energy companies and they are looking toward what their future will look like and what [their energy] mix will look like,” Reheis-Boyd said.

The Brookings Institute’s report also noted that future studies on the employment impact of the energy transition must consider the transition taking place within the workforce of traditional energy producers. “Considering that many of today’s industries that contribute to dirtier activities will become central to tomorrow’s clean energy economy, defining clean energy economy occupations means looking much wider than just the newest green occupations,” the report stated. The natural gas, petroleum and fossil fuel industry currently employs over 888,000 Americans, according to the 2019 U.S. Energy and Employment Report published by the National Association of State Energy Officials and the Energy Futures Initiative.

Cost 

The cost of the energy transition toward a higher percentage of renewable energy and – potentially – an energy mix completely free of fossil fuels, can be measured at an individual company level and as a change in tax revenues collected by the local, state and federal governments.

The oil and gas industry in California generated a total of $21.5 billion in taxes in 2017, according to a report commissioned by WSPA and published by the Los Angeles Economic Development Corporation (LAEDC). A majority of the total tax revenue generated by the industry came from sales, property and income tax, according to the report. The potential tax revenue from renewable energy production remains to be explored as wind farms, biomass plants and solar fields continue to grow across the country. Currently, the State of California offers a large number of grant programs and tax incentives to encourage residents and businesses to make the switch toward renewable energy sources and become more energy efficient.

The technology available for fossil-free energy production is still significantly more expensive than traditional oil and gas production, according to Weikko Wirta, operations and maintenance manager at AES Southland. The company, which operates natural gas plants in Alamitos, Huntington Beach and Redondo Beach, also runs a wind park near Palm Springs. “Despite the fact that solar, wind and battery energy storage costs have come down dramatically, they still continue to be prohibitive,” Wirta said.

Timeline And Feasibility

AES is currently in the process of bringing its South Bay gas operations into compliance with new standards set forth by the state government. In 2010, the State Water Resources Control Board kicked off the process of phasing out the use of seawater for the cooling of natural gas plants by the end of 2020. Several aging coastal gas plants are expected to shut down by that deadline. Critics of the regulation, which seeks to protect marine life and reduce emissions by curbing the use of natural gas power in the state, say shutting down natural gas plants may endanger the state’s energy transition.

“Storage technology has not matured at [a large enough] scale to be able to store solar for the times that we need it, because as we know, the sun doesn’t shine all the time and the wind doesn’t blow all the time,” Reheis-Boyd explained. “So natural gas was always the backup.”

This concern was echoed by the California Independent Systems Operator (CAISO). In July 2019, CAISO submitted a letter to the California Public Utilities Commission (CPUC), expressing concerns that California could face power shortages if gas plants were taken off the grid by the 2020 deadline. On September 12, the CPUC proposed a procurement process for 2.5-gigawatt in additional power production resources across the state to ensure grid reliability, which could include both an expansion of renewable power production capacities and an extension of the operations at coastal gas facilities until 2023.

“This gap is real and it needs to be addressed from a reliability standpoint,” Wirta said. “It’s just a matter of time before battery storage gets off the ground [and] catches up with the real generation demand, and that’s when California will really have achieved its goals.” In 2017, natural gas made up 33% of the state’s electricity mix, according to the California Energy Commission.

The Union of Concerned Scientists, a nonprofit science advocacy organization, agreed that the state will have to rely on some level of natural gas power production until at least 2030 to ensure energy reliability as renewable energy production processes mature. “But for California to realize the benefits of its clean energy transition and achieve its global warming emissions targets, it needs to reduce its dependence on natural gas electricity generation significantly,” a 2018 release by the organization stated. “This transition should prioritize reducing natural gas generation in communities most negatively affected by the pollution resulting from burning fossil fuels and by the social, economic and health burdens associated with global warming.”

Experts from both the renewable and fossil fuel sectors have described the state’s goals for phasing out fossil fuels as ambitious. “You have to give the State of California credit for really pushing the envelope,” Wirta noted. “The goals are realistic; the timeline was a little optimistic.”

Among U.S. consumers, the adoption of renewable technologies, for example to power personal vehicles, still lags behind adoption levels in other parts of the world, Roche said. “Historically, gasoline has always been very inexpensive, so the auto manufacturers – until recently – have not really been pushing alternatives to gasoline cars,” he explained. “I don’t know if the auto manufacturers would be willing to make the investment to bring [alternatively-fueled] consumer vehicles to market here like they have in Europe, South America and elsewhere.”

Until then, Reheis-Boyd argued, California shouldn’t count out its local fossil fuel production just yet. “If you don’t produce it in California, under the strictest regulations – because California has them – and the very well-paying jobs that go with it, you still have to import it,” she noted. “California loses in that equation.”

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