Please note that the transcript provided below is AI-generated and intended for reference. It may contain missing words, misspellings, or other small errors. To request a correction or clarification, please contact info@theclimatecenter.org.
Woody Hastings, The Climate Center (00:01:14):
So thank you all for joining us today. Happy to see you all here. I’m going to get started right on time so that we can hear from our speakers. That’s what we’re here for today. Our timekeeper is busy making sure all of our panelists know that she’s the timekeeper and she’ll keep us on track. So this is the phase out polluting fuels. Let’s see if that’s going to work. Phase out polluting fuel strikes. So this morning here today, holistic transition away from fossil fuels this afternoon at 1:50 in this track. We will be talking about the gasoline scene and the particulars about the market dynamics in gasoline right now and so much going on there. And then the final one at 3:35 will be all around methane, natural gas, fossil gas, and how to extricate ourselves from the methane leaks around the state.
(00:02:13):
And so we are here from here to holistic transition away from fossil fuels. You’ll see this slide again in the moment. Those are our panelists today. Quinn Ide will be our moderator. So just real quick, thank you to our sponsors. I’m not going to read these off again. They were read off this morning in the plenary. Hope you were here. Our key sponsors, and that’s more of them there. Thank you to our sponsors. We couldn’t do this without them. And welcome. If you can find a seat, that’d be great. And even more sponsors. So many levels of sponsorship, if you’re ever interested in sponsoring, please reach out to us. And also lots of individual donors who have helped along the way. And then we also have promotional partners who help put the word out and make sure that folks are aware of the summit and to help get people here.
(00:03:07):
So thank you to all our promotional partners. If you have not yet logged onto the Event Leaf event platform, that’s the QR code there. If you want to take a snap of that and get onto the EventLeaf program, that’s got all kinds of things you can do to track the summit and share and network and all that kind of stuff. And if you’re going to do any social media, that’s the hashtag right there. And we’re on a whole bunch of the social, so there you go.
(00:03:39):
And so without any further ado, I’d like to bring up Quinn Eide, the moderator for today’s panel. Quinn is with Fossil Free California, and I’m happy to say that Climate Center collaborates with Quinn and the good folks at Fossil Free California on a regular basis. We’re currently working together to unrig California with the AB 1790 legislation by Damon Connelly. So happy to be working with Quinn in that context and here at the summit as well. So take it away, Quinn.
Quinn Eide, Fossil Free California (00:04:23):
So thank you all for joining. As folks are coming in, there are seats up in the front if there aren’t any in the back. So don’t be shy. Thank you all for joining. We are here from here to a holistic transition away from fossil fuels panel and really thankful to see everyone who is able to come out both in the audience and also for the panelists for making the trip over here.
(00:04:47):
And this is, I think, one of the most powerful panels that I think I’ve seen on this for today. So I’m very excited to hear you guys all speak. We have voices from academic, government and nonprofit experts, and we’re deepening our understanding of the fossil fuel transition, the need for workers and community members and policy members to all speak together around the holistic transition. And without further ado, I’m going to introduce to you the first panelist. As they are speaking, I’d encourage you to hold your questions. We will have quite a bit of time for Q&A at the end, but we are not interrupting between their speakers. So we’re going one, two, three, four, and then Q&A. So Emily, you are my first one to ask questions to. Emily is a associate professor at Notre Dame and civil engineer and environmental sociologist working on enacting a just energy transition, including by researching ways to make decision making more just, effective and informed.
(00:05:52):
So thank you, Emily. My first question for you is, experts often refer to this moment as mid-transition. In the transition away from fossil fuels, could you share what the characteristics and challenges of the moment of mid-transition are and what the role of the government is in supporting the transition in this crucial moment?
Dr. Emily Grubert, Notre Dame (00:06:47):
(00:06:47):
It’s such a pleasure to be here today and it’s, I think, always a really neat opportunity to come talk about fossil phase out and some of the really challenging infrastructural conditions that this brings up. So I’m out here from Indiana just people are kind of like, “Why do you work in California?” I was born in Bakersfield actually, and then I’m from LA originally more family-wise, lived in the Bay for a long time. So always very, very interested in what’s going on in California, especially now that I’m in sort of a studying industrial transition in a post-industrial transition region. Kind of thinking about how we do this better is something that I care a lot about. So what I wanted to talk about today in response to Quinn’s question, especially about mid-transition is just what does this transition actually look like and what do we need to be prepared for and what do we need to be, I think, maybe a little bit more honest with ourselves than we’ve been able to be.
(00:07:39):
The slightly more positive spin on that I think is that a lot of the work that I do is looking at what we would need to do if we actually took the possibility of success seriously. So when we think about actually getting to zero emissions by mid-centuries, 25 years from now, I won’t be eligible for social security yet and I’m not that young, but one of the things that I think is really clear when we look at this is just the Gantt chart of what that means for the 80% of our energy system that is currently fossil based. When you have these really, really big pieces of infrastructure that I do genuinely take quite a while to wind down safely, when do we need to start? The answer generally is previously, but now that we are where we are, I think a lot of the work that I do is really thinking about during this transition phase and colleague Sarah Hasting Simon, who’s at the University of Calgary and I have been calling this the mid transition for a few years, but thinking about this period where things get harder before they get easier, essentially, you have a stable fossil state and a stable post fossil state.
(00:08:39):
In the middle, you’re dealing with two systems that are working in conditions that they weren’t designed for, competing with each other, and then also dealing with increasingly challenging operational conditions under climate change all at the same time. So how do you handle that during the period where you can’t really design a system purely around the no fossil system safely and in a way that doesn’t end up just socializing all of our major losses essentially in terms of environmental liabilities, these kinds of things. As it relates to refining in particular, which is something that my research team and I have been working on quite a bit over the last year, some in collaboration with the CEC actually is really thinking carefully about what planning looks like for this transition period. Maybe just because this is going to turn into Q&A at some point too, let me get to the controversial piece, which is essentially that we’ve sort of concluded from an academic and more theoretical perspective that something that looks a lot like public ownership, public management, however you want to talk about that, where a governmental organization has control over what closes when, and in what order is probably unnecessary but not sufficient condition for doing this well.
(00:09:48):
And the point there is essentially that you have a lot of situations where you actually do need to retain some service provision capacity from the fossil system before you’re ready to let it go. So up until the point where your new system is prepared and you can accelerate this transition by making that new system ready earlier, but up until the point where that new system is ready to go, you actually do need this high hazard, often really complex industry being able to provide services that you’re not able to provide otherwise. And so how do you make sure that that happens? If you let retirements happen of these assets, basically on the kind of way that we generally think about markets working, where stuff stays open as long as it’s profitable and then closes past that point or issues a bankruptcy proceeding and kind of goes from there, what we would argue is that you end up in the wrong order, such that you don’t actually necessarily want the most profitable thing to be the last thing that exits.
(00:10:41):
You want the thing that is able to provide the last service you need to be the one that exits. That’s not the way that a market driven transition would work. We also see a lot of evidence, and I study coal quite a bit. We also see a lot of evidence from coal in particular that like recent transition stuff. There’s a lot of deep historical examples that I’m super happy to talk about here too, but the recent examples from coal tend to be really sudden exits by individual assets that leave massive environmental and pension liabilities that really harm host communities and really harm workforces and then essentially leave behind these really significant public liabilities that often don’t get paid out. So bankruptcy leading to really, really sudden closure, that has been really disruptive in the coal industry for the communities that have experienced it. The rest of the system hasn’t necessarily felt it as hard because we do have other ways of making electricity.
(00:11:36):
What I think is actually kind of scary is to think about the fact that this problem is going to be much, much more significant with oil and gas. They provide services that are harder to replace if you haven’t thought about that. It’s not just electricity. We’re talking about mobility that is almost entirely petroleum based at this point. Even in California, like two and a half million EVs is only about 10% of all duty vehicles on the road, right? And so like huge achievement, not even probably in the point where we’re really seeing significant constraints yet. Similarly with gas, this is something that we use for heat. I live in a cold climate now and it’s something that I really worry about as we start talking about what a grid needs to look like that can guarantee it’s going to keep people safe as you transition.
(00:12:12):
But the point basically being, we have not actually seen the really harmful version of bankruptcy driven closures that proceed in profitability order. So where that kind of leads us is actually planning for a managed decline from the perspective of normatively wanting to push this forward, normatively wanting to achieve climate policies basically does require that you have some sort of non-market coordinating function that probably looks like a government in most cases. This could obviously go really badly. And I think a critique that we get a lot of the time is like, show me a time when the government’s actually done something like this. Well, there are a few, but I think one of the things that we do really need to think about carefully just from a political perspective there too is like, this is an institutional framework that probably is the one that could work.
(00:13:01):
It might not work. What we’re doing right now can’t work if we’re really talking about reaching net zero. And so thinking about what the politics around shifting to something where people actually are committed to climate action, I think leads you to some slightly different conclusions about what’s possible. I am really sympathetic to the argument that I hear from a lot of people that maybe we should take the insurance mechanism, assume we’re not going to succeed all the way and do the thing that is harm reducing. But if you actually are talking about fully getting to a net zero future in the next couple of decades, institutionally, we probably do need much more coordination and much more planning. In practice, I think one of the really interesting questions about this is what kind of legal liability transfer happens. If you do have something like a state or a federal government taking over these assets, there are mechanisms to basically retain liability for some of those environmental harms in particular that have been practiced in other contexts, but it’s also true that if there’s no money left in the system, there’s not a lot that you can do, right?
(00:14:01):
And so one of the arguments that we also make is if you’re going to go down this path, you probably need to move toward a public ownership, public management structure all at once, as early as you can in order to have the maximum control over what kinds of services you’re actually creating. This is challenging too, because costs might go up under this environment, partially because probably a government would have a higher standard of care for its people in terms of the kind of environmental protections and safety protections that they’re encountering. Communicating about that would be really important if you were going to do something like this, but also being really, really clear that in a lot of these cases, these assets are, and I’m talking in general, not just about refineries, but in general, these assets are often a hundred years old. There are challenges that we don’t know about yet.
(00:14:45):
So being able to very clearly communicate what you’re doing, why, and how the other side is going to be more effective than what we’re doing now is a really critical piece of this. Thank you.
Quinn Eide, Fossil Free California (00:14:55):
Thank you so much, Emily, for that perspective. And I think one of the through lines is that we really need to have oversight that’s helping to guide us through this process is what I’m hearing you say. And so I’m excited to really turn this now over to Tai, who is from the California Division of Petroleum Oversight. Tai, from your perspective within the California Division of Petroleum Oversight, what is the arc of California’s policy and supporting the transition? Could you share with us … Oops. Could you share with us more about the creation of the department, the role you’re playing today, especially in light of the war in Iran, as well as where you see policy moving in the future?
Tai Milder, California Energy Commission (00:15:41):
Yeah. Thank you so much.
Tai Milder, California Energy Commission (00:15:57):
Well, first I want to say thank you to the fellow panelists, Quinn, to you and to The Climate Center.
(00:16:03):
I think this is a nice counterpoint. Dr. Grubert is perhaps the preeminent voice in the mid transition, and so I’m here to sort of suggest some alternative potential questions that we should also, in my view, be evaluating. So one is, what does success look like? Is it necessarily sort of a state intervention model or is there a market and competition based approach that we can bring to transitioning away from fossil fuels? And my division exists in part to try and make that alternative reality possible and to come to pass. And I would suggest at the outset that instead of looking to the coal industry for the example that California needs to follow, we should look to other parts of the country where we’ve already transitioned away from a refinery dominated landscape and have more diverse sources of fuel. So as we go to the first slide, just, I love the greatest hits of antitrust.
(00:16:57):
And so this is a quote, I’m going to see if anyone recognizes it and I’ll take hands maybe at the end. The concern about high gas prices in California is low competition and that six companies were controlling virtually all of the supply in California. So we’ll come back to that in a minute. Go to the next slide. So perhaps a little big for seven minutes is to try and explain for folks what’s happening here in California in the midst of this Iran conflict. So we’ve gotten so many questions. What’s going on? Why are gas prices going up as much as they are and how does this impact the California market? If you look at the very far right of this screen, you’ll see a gray bar and you can see California gas prices shooting up over a dollar, but also shooting up similarly in the rest of the United States and also for the cost of crude oil.
(00:17:46):
If you compare that to the very far left side of the same graph, there’s another gray bar. That was the Ukraine invasion. So there are times that global events sweep up California as a regional market and our prices go up as crude oil and as gasoline prices go up nationwide. We’ve also unfortunately had California specific price spikes, those are in red, where California prices went off the charts, even though prices in the rest of the United States were going down and crude was stable. Next slide please. We always have to mention price bikes because this is the core work that DPMO has done, really raising consciousness on the supply challenges that we have. So we’ve already surfaced those root causes for those episodic price spikes, the ones in 2022 and 2023, and we’re working with other state policy makers to try and address those. Next slide, please.
(00:18:39):
The other major problem California has is persistently high retail prices. And one of the things we pointed to in our first annual report is the fact that branded gasoline prices in California are so much higher than unbranded prices. And that’s a phenomenon only in California. So you can see prices 60, 70, 80 cents higher between a branded station and an unbranded station, even though all the gas meets the stringent standards from the air resources board. Next slide, please. So what I was hoping to do is walk through the fuels transition in a couple of different dimensions. One is about what kind of fuel we’re using in California and where it’s coming from. So in this schematic, which is around 2010, you have crude oil being imported to refining hubs around the Bay Area and Los Angeles, and then refined product being distributed throughout the state and to other neighboring states.
(00:19:32):
Crude oil has been a major import. We looked this up. California switched from being predominantly self-supplied to being importing crude oil in 1989. That’s during the Duke Majian administration. So we have been relying on important crude oil for a very long time. So when a global event happens and it drives up the price of crude, it’s impacting us in California. Even our crude oil that comes out of the ground in California is priced relative to global crude prices. So we’re never insulated from what happens abroad as we use fossil fuels. Next slide, please. So this is fast forward to today. We have more or less the same system that we had in 2010, but now we’re also importing refined products. So what that means is we’re importing less crude from other countries and from Alaska, but we’re in its place reducing … I’m sorry, importing refined products, and we’re still producing a lot of refined products in California.
(00:20:27):
Don’t want you to get the wrong idea. Around 75 to 80% is typical, is coming from our in- state refineries, but what’s happening is the imports are shifting from crude to refined products. Next slide, please. So this is what the future could look like in California. We could, for the first time, have a pipeline, if you look to the bottom of the screen, from Arizona, bringing gasoline, refining other parts of the country to California. This would give us a third source of supply. We would have in- state refine, we’d have marine deliveries, and we would have pipeline deliveries. That would be really a game changer for the California market. When we think about those regional price spikes, if we’re getting supply from different places, the market response may help to soften those spikes. Next slide, please. So when we think about what the future could look like, one thing we’re trying to do is look to what other parts of the country have done.
(00:21:21):
So PADD one of the United States is the Northeast. For geography buffs-
(00:21:27):
Sure. Petroleum Area Defense District. So the federal government organizes the US and different defense districts. PADD one is the Northeast. Life starts on the Northeast of the United States with the federal government. So the purple is the New England area. It’s all imports. They don’t have any refineries there. The middle is the New York area, and then you’ve got the South Atlantic seaboard below that. PADD 1B is the same size as California when you think about how much gasoline we consume. And PADD 1B has had five refineries close. I think actually, sorry, four closed since 2009, and they have these diverse supply models. So go to the next slide, please.
(00:22:11):
So wanted to show how they have seen refinery closure, as has California, that outpaces demand decline, but their demand is declining over time, like California’s is, but perhaps not as abruptly. And they have this diversified supply model, which is leading to quite stable prices. The global benchmark price for gasoline related to US deliveries is called RBOB, and that’s what’s delivered to PADD 1B. Next slide, please. So what’s been happening in California as we diversify our supply mix is we’re having more imports, which is having the impact of increasing market supply from different sources, not just the in- state refiners, but also now other market participants who are bringing in refined gasoline from other places. And again, that refined gasoline is taking the place of crude oil that was already coming in from imports as well. Next slide, please. So the question is, what’s the impact of these increased imports been and what will it be?
(00:23:07):
We actually saw record imports in 2024 and 2025, and we didn’t have any of our regional price spikes. Next slide, please. So this is way too ambitious because the impact on gasoline prices in the US is a whole topic to itself. One of the things you’ll notice on this heat map, which is showing how much prices have gone up, is that California, it looks a lot like Texas and major coastal population centers are being hit over a dollar a barrel, I’m sorry, dollar a gallon. And so as I wrap up here, I’ll say California is being hit like other states, but not because of our imports alone. One more slide, if I can indulge. California is also exporting a lot of fuel, and so these exports have gone up since the conflict started. So fuel that’s refined in California doesn’t necessarily stay in California. And I have to give you the quote.
Tai Milder, California Energy Commission (00:24:00):
This is Attorney General Bill Lock here in 1999. The problems we’ve been seeing have been with us for decades and decades, and part of what we need to do is think about a competitive response to the transition. Thank you.
Quinn Eide, Fossil Free California (00:24:13):
All right. Thank you so much, Tai. I’m going to bring us to the next presenter before I start speaking. Great. So next up, we are going to actually zoom into more of the community perspective. And so thank you so much for being here, Bahram. Bahram works at the Communities for Better Environment and manages research, policy, and planning projects. And with that perspective, I would love to hear from you with the many fights and the creation of crucial departments such as the California Division of Petroleum Oversight, these sorts of things are often instigated by the communities themselves. Can you share a little bit more about the history there and in particular, share about the fight for pollution reduction in refineries and help us understand what communities are asking for in terms of a managed decline.
Bahram Fazeli, Communities for a Better Environment (00:25:13):
Thank you. Just a little bit about CBE. Almost 50 years old, we are an environmental health and justice organization.
Bahram Fazeli, Communities for a Better Environment (00:25:59):
Around five decades, environmental health justice organization and we give the tools to communities, vulnerable communities to be able to lower the pollution in their communities and build healthier communities. And that wasn’t exactly the mission statement I was supposed to memorize, but we have a triad model of legal research, science, and organizing, and we organize in the Bay Area and in LA. And next slide, please. We work on toxics, some of them that are not fossil fuel. A lot of toxics that are not fossil fuel in our communities, but land use and a lot of fossil fuel stuff from cradle to grave of oil drilling, refineries, and tailpipe emission and gas power plants. And we also work for building the good for cleaning the air and resilient communities and equitable mobility, affordable, clean energy, and open space. Next slide, please.
(00:27:02):
We have worked on refineries for decades and we have pushed for pollution prevention, safer refineries. We’ve collaborated with labor. This is just some of the accidents over the years that also give you a picture of why communities are actually concerned. These are in LA and the Bay Area refineries. Next slide, please. The wide range of polluting sources that affects people at the local toxics level, benzene, the carcinogen, and precursors to smog, and of course, climate causing emissions. So there are combustion sources like flares and boilers and heaters, and then there are leaks in all parts of refineries. And over the decades, we have worked with the air districts and tried to reduce emissions from these sources that have a significant health impacts on our communities and on the region. And of course, they have global climate impacts.
(00:28:18):
And we have also tried to make refineries safer in the aftermath of Richmond Fire in 2012. We supported the labor in pushing through process safety management regulations. Next slide, please. Now, this is a lot of work. I mean, our community members work full-time and they live in the frontline communities, the fence line communities, and at night they get engaged with these rulemaking processes. And of course, we have, as a staff and attorneys and our scientists, refinery scientists, experts and researchers and organizers work to make sure that the refineries are safer. Emissions are reduced and people can have a better quality of life. But refineries are inherently, and fossil fuel operations are inherently unsafe and inherently polluting operations. And couple that with the climate change impacts, then we know that we have to find a plan to phase out refineries in a responsible way that supports the workers and the communities for California to reach its 2045 targets.
(00:29:35):
I know you can’t say that in the building right now, but the fact of a matter is that if you want to reach carbon neutrality by 2045, you can’t have many refineries operating. That’s a fact. So in fact, Air District itself in the 2022 Clean Air Act plan said that you have to phase out some of these operations. So our communities have been asking for a managed decline and adjust transition.
(00:30:09):
Next please. And we’ve had some victories. We passed SB 1137 to create a buffer zone with oil drilling for 3,200 feet buffer zone. A polluter pay initiative in Richmond. Great work that carry our staff attorneys there. The Richmond team and we generating 550 million over the next 10 years was a settlement that the Richmond city reached with the Chevron. And then we’ve had oil drilling policy phase outs in LA. That was a one decade campaign that I personally worked on in the city of LA and LA County. And then we’ve got some commitments in the 2022 scoping plan and we also got some stuff in the bucket three, the famous bucket three of the California Energy Commission. Next slide, please.
Woody Hastings, The Climate Center (00:31:03):
You want to say what bucket three was?
Bahram Fazeli, Communities for a Better Environment (00:31:08):
Suspense. Yes, I will say bucket three. It’s the slide ethic. So moving forward, those are the four pillars of just transition, but those who are familiar with the works of Mijing Cha and the government support, dedicated funding, strong coalitions and economic diversification. Now, I want to say that one of the most important things is that we want the legislature and the governor’s office this year and whoever the governor is next year, and it’s really to take charge. You need to create a detailed blueprint. You need to create a plan with funding. In a pollen report that was done by University of Massachusetts, they said you need tens of millions of dollars, tens of millions of dollars, billions of dollars a year to get us to the just transition, to get us to create those safety nets, to get us to 2045 goals. So we were very surprised that the oil industry, and even some folks other than the oil industry, opposed a $500 million allocation for displaced oil and gas workers funds.
(00:32:31):
So this is the kind of commitment we need from the legislature and the governor to make sure that these plans are detailed. They show us how we go from point A to point B to point C and they are funded, not philosophical plans, but plans that are funded. And next slide, bucket three, Woody was asking about bucket three. I knew people were going to answer. Well, this is what we worked with the CEC on the bucket three. I mean, we need, again, just transition funding, worker and community safety, support for California authority and not streaming permitting processes and pushing back on the good protection that we have worked decades to secure for the frontline communities. And of course, demand side reduction and transparency for when these refineries want to phase out, we want to make sure that they get cleaned up and the communities and the state and the cities are not left holding the bill.
(00:33:40):
So these are some of the things that we are working for and it requires a lot of resources, a lot of capacity, and we have a lot of our friends here. I see Jason from Center for Biological Diversity. We got APEN here, we got Catherine and Faraz and a lot of other folks who are working on this stuff and climate centers supporting us. So thank you very much. And we look forward to pushing forward with phasing out fossil fuel and creating a safer communities for the EJ communities and for the workers.
Quinn Eide, Fossil Free California (00:34:13):
Great. Thank you so much, Bahram. As we transition to our final panelist, Josh, I really am looking forward to hearing more about the worker perspective as well as your perspective from the UC Berkeley Labor Center. So we’ve heard a lot so far about the history and the current landscape of the transition away from fossil fuels. We also heard about what communities, workers and consumers are demanding. Can you now paint us a picture of where we can go from here to incorporate diverse community workers and consumer needs throughout an undoubtedly massive transition that we know the fossil fuel industry is really resisting? We’d love to hear about possible policy pathways to move forward this holistic transition. And could you finally share thoughts about what work is currently underway, especially amongst labor groups and how can we plug in? Finish us off. Thank you.
Josh Sonnenfeld, UC Berkeley Labor Center (00:35:14):
Thanks so much for having me. Hi everyone. I’m Josh Sonenfeld. I’m with the UC Berkeley Labor Center and I used to be a senior policy strategist with the Bluegreen Alliance. Today I’m going to be given sort of a case study on some of our work in Contra Costa County planning for just transition between labor unions and environmental justice groups and talk a little bit about the risk, but hopefully spend more time talking about some of the strategies and answers to this question of, well, what can we be doing? And you’ll see throughout this whole conversation, I’m weaving together worker impacts and community impacts on the ground. There’s so much partnership development that’s been happening that I actually think having a holistic transition strategy is really about weaving those strategies together for workers and communities together in fossil fuel dependent communities.
(00:36:00):
And go to the next slide. So to orient everyone, I’ll be focusing on, for the case study, focusing on Contra Costa County, which is Northern California’s oil refining hub. We have four oil, or excuse me, four refineries in Contra Costa, one in Solano. This is, and of course, Valero Benicias in the process of idling right now with layoffs happening as we speak. Next slide, please. There’s a long history of collaboration around refinery safety in Contra Costa County stemming out of the Chevron Richmond fire that Barrow mentioned in 2012. I was involved in that response as well. And it looks like this is an old slide, but we can go to the next one.
(00:36:44):
But the real wake up call for us around just transition was the idling of the Marathon Martinez refinery in 2020, which laid off over 700 workers, including 350 members of the United Steel Workers Union, local five. Nick Plurkowski is in the audience over here from local five if you want to talk to him about that experience. It’s since transitioned to renewable fuel facility, but it only has a portion of their former workforce. Next slide, please. So again, this was this wake up call. For a long time, folks had talked about refinery closures and just transition and is this going to happen? But then it actually took a refinery closing in 2020 to bring folks together. And the Bluegreen Alliance secured funding through the State Workforce Development Board and created this partnership, the Contra Costa Refinery Transition Partnership, whose members you see on the screen, including the steel workers who represent the full-time workers in the facility, the building trades represented by the plumbers and pipe fitters union, APEN on behalf of the EJ community and a bunch of other folks that you can see on the screen as well here.
(00:37:48):
I facilitated that partnership. Next slide. So a couple of pieces of the research that we did, this is sort of rare in our current political environment to actually research issues before we come up with policy strategy. So we spent a couple of years really figuring out what do workers and communities need from the energy transition, specifically as it relates to refineries. We completed what has turned out to be one of the most detailed academic studies ever done on what’s happened to workers after a fossil fuel facility closure. This was the Marathon Martinez worker study and not too much of a surprise, but it was really harmful. It was really impacted workers. A year after layoff, 26% of workers were still unemployed. And for those who found new jobs, they had on average a 24% wage cut in their current position. Next slide, please.
(00:38:40):
This study helped to shape the state’s displaced oil and gas worker fund, which was passed in 2022, but I’ll note that a lot of the most important pieces of the recommendations from this study have not become part of the state’s displaced oil and gas program. So specifically policies such as wage replacement, which means when you get into a position that makes significantly less than you’re currently making or than your former position, that you get some sort of compensation for that. So you’re not losing your house or having to sell your car or pulling your kids out of college. We don’t have wage replacement right now for California fossil fuel workers. That’s the top thing that workers ask for. We also don’t have bridge to retirement. That’s something that could really help. You had situations in Marathon where you had workers that were just a few years away from eligibility for early retirement, and we could have helped them get to retirement rather than having putting them out into the job market where they’re 60 years old or 55 years old.
(00:39:34):
That can help reduce the number of folks that are out there competing for jobs. And I’ll note that right now there actually is legislation sponsored by the Steelworkers Union and the California Labor for Climate Jobs, specifically to address this gap. The last thing I’ll note about the displaced oil and gas worker fund is it actually sunsets in 2027 and it’s out of funds. So at the time right now where we have refineries that closed in December, refineries that are closing right now, there’s no additional funds to put out there to support workers that are being impacted by those closures. Next slide. The next piece of research that we did was actually folks were really wanting to know what is the pace and scale of refinery closures. We knew Marathon was closed and that surprised everyone. Are we going to see other refinery closures in the Bay Area?
(00:40:18):
So we hired a couple petroleum economists to help us chart this out. You can see these charts here on the map. One is if exports remain constant. The other is if exports reduce at the same rate as in- state or excuse me, as consumption within the region. It’s between 65 to 92% reduction. And so again, what that told us, and you can extrapolate this at the statewide level, is that refinery closures are part of the energy transition. We need to plan for them. We can proactively plan for them. We don’t need to be surprised by when they happen. It’s part of the energy transition. Next slide. And then the next piece of research was we looked at what are the jobs and tax implications, tax revenue implications foreclosure. This is specific to Contra Costa County only, but we’re looking at 3000 direct jobs, 15,000 indirect jobs.
(00:41:07):
And these are really good jobs. Unions, the workers have fought for decades to make these quality jobs. They’ve gone on strike. Some of you in this room have probably been on those picket lines. And unfortunately, the rest of the jobs in the economy are nowhere nearly as good as refinery jobs. So that makes a really tougher transition for workers. Also, tax revenue is a really important piece of it where the overall tax contribution of the refining industry and contra cost is about a billion dollars a year. When you include the refineries with the entire supply chain, the connected services. Next slide. Actually, we can go back. Thanks. And so right now we’re actually experiencing this right now with Valero Benicia, where the city is talking about 10 to $12 million annual loss in tax revenue, about 20% of their city’s general fund from the Valero idling.
(00:42:05):
Next slide. The final big piece of research that we did was around cleanup and remediation. And I’ll note that APEN and CBE have actually put out a much more detailed study on this since then around the Phillips 66 closure in Los Angeles. The big takeaway here is we need to plan ahead. There’s not enough financial assurances in place to make sure that communities aren’t stuck with the cost of cleaning up these facilities. Next slide. There’s 31 policy recommendations in a report. I highly encourage you to read it. It’s on the Bluegreen Alliance website. It covers these five areas, but this is the holistic transition strategy at a regional level, but a lot of these policies really are state policies. Next slide.
Josh Sonnenfeld, UC Berkeley Labor Center (00:42:56):
Thank you. Actually, go back. I think my next slide, I’ll just speak to it. So what does a holistic transition strategy look like for California? It’s two pieces. It’s planning the decline and it’s planning the growth, right? So planning the decline, it’s having this robust safety net program for workers, short-term tax stabilization funds for communities like Benicia, so they can avoid this sudden fiscal cliff cleanup requirement for facilities, decommissioning facilities, but also ensuring community, the community is really shaping the vision for what to do at these refinery sites. But it’s also effective statewide coordination, having offices of just transition. We have them in Colorado, in Michigan, and Minnesota. Why don’t we have that yet in California? But also planning the growth of the new clean economy in a way that benefits everyone. So at the federal level, we had federal energy communities to target investment in communities that were impacted by fossil fuel closures.
(00:43:49):
How can we think about targeting investment in fossil fuel communities in California, knowing that this economic diversification is so important, but having that again be really shaped by communities in terms of what do they want their future economies to look like? And then also attaching standards. Every year we’re putting out billions of dollars in the climate transition, excuse me, to support the climate transition. Only 60% of those climate investments in California, based on the study we did at the labor center have labor standards attached to them. So that means 40% of these billions of dollars that we’re putting out every year have no guarantee that they’re actually creating quality jobs. That harms our ability to actually transition to a future economy with quality jobs. I’ll have some more examples, but I’ll stop there seeing my time is up. Thank you.
Quinn Eide, Fossil Free California (00:44:34):
Great. Thank you so much, Josh. And now we’ve got about 20 minutes left, so we will turn it over to Q&A. Actually, we might be closer to 15 now. If anyone in the audience has a question, go ahead and raise your hand.
Speaker 7 (00:45:14):
If fossil fuels are … If fossil fuels really paid for the damage that they do … Yeah. What would be the effect on the transition you’ve described?
Dr. Emily Grubert, Notre Dame (00:46:05):
I think it’s an interesting question. My general feeling is that actually at this point, especially the pure play refining companies probably can’t pay that cost, which is a real challenge. We’re doing a little bit of work on what it would actually look like to remediate the sites that the refineries are on. This is the technical term being a wag, a wild ass guess at this point because we’re not done with the analysis, but I don’t think it’s out of range to expect that this might be sort of a $5 billion per site type of cleanup if we’re talking about actual lander use, not to mention a lot of the climate damages. This is one of the really challenging things where I know everyone in this room has been working on this stuff for a really long time.
(00:46:46):
There was a time when many of us were working on this where the conclusion that you actually can’t deal with this as sort of a private taxation thing might have been true. I don’t think that’s true anymore. And so thinking carefully about what a managed transition where you do acknowledge that there has to be some public cost here, and a lot of that’s already been paid with people’s bodies. I think there is not an ability for these companies to pay that anymore, is my take.
Tai Milder, California Energy Commission (00:47:19):
I’ll add and then happy to pass on. One of the things we’ve been trying to track is what’s going on in terms of trends for the profitability of the industry, and then where does that money go? And so one, if you look, there’s been record profits in recent years, and unfortunately, I think this year, again, due to the Iran conflict, you’re going to see record high profits again in the industry. And what we’ve seen in the financials is that the money goes to dividends and stock buybacks, which drives stock prices higher, but it doesn’t go to capital investments or other investments in operations. And I think that’s a level of abstraction above what you were speaking to professor, but I think that’s important to keep in mind the record profitability in this industry and soaring stock prices.
Bahram Fazeli, Communities for a Better Environment (00:48:06):
So I just want to say that there was actually a bill last session, SB684, AB 1243 by Menjovar and Addis that Jason can speak to more because they were a sponsor of the super fund bill, Climate Superfund Bill, and that can assess all the damage that the oil companies that emitted greenhouse gases had done globally from 1990 to 2020, I believe. And so that would assess a fee, and it would generate a significant amount of revenue to deal with all kinds of impacts that they have caused. And for the political climate didn’t allow that to go through, but that’s something that I think that absolutely we definitely supported it and a lot of other EG groups supported it. And that is the kind of level of commitment I think we need for the oil companies that have done the damage to be able to actually pay for the dealing with the resiliency and climate change and adaptation and some of it could also go into the just transition.
(00:49:29):
And I know that the work is being done to introduce it again.
Josh Sonnenfeld, UC Berkeley Labor Center (00:49:36):
I’ll just speak towards one piece of the cost question that I want to mention around refinery cleanup. So there actually, there is a bill in the legislature right now to have transparency around cleanup of refinery sites. My understanding, this is being sponsored by APEN and CBE. And my understanding is that refineries actually have this information already themselves. And in terms of what’s the asset retirement obligations, if I got the acronym right, ARO, but they’re not sharing that publicly. So for us to be able to understand that would be really valuable information for communities and workers to understand what kind of cleanup are we looking for? And also to be able to develop strategies to make sure they’re on the hook for it. That’s their cost. That’s not a public cost. That should not be a public cost. And just like the state has pursued strategies to make sure that to minimize the amount the public is taking on the cost of cleanup idle oil wells, we absolutely need to make sure that we’re not stuck with the cost of cleanup refinery sites too.
(00:50:33):
So take a look for that legislation. Bill number 1259.
Speaker 8 (00:50:49):
You. Okay. Thank you. Hi, I’m Liza Tucker from Consumer Watchdog and I have a question for you, Tai. Actually, a couple questions. Legislation was passed in 23 and 24 that empowered the CEC to write rules, specifically on refineries having to hold inventory, having resupply plans and possibly imposing a price gouging penalty. That penalty was delayed under pressure, but the other two weren’t. And my question is, why have they yet not been implemented? And if they were already in place, would we be avoiding the scenario that we’re looking at now with sky high gas prices in California? Thanks.
Tai Milder, California Energy Commission (00:51:31):
Yeah. So Tai Milder with DPMO, we’re an independent division of the CEC, so we can’t speak to CEC in their regulatory processes. And so we were created independently for a reason. Our market oversight role is not that. We were strong proponents of ABX21, the tools of resupply and minimum inventories, and that was drawn on the experience of international energy agency member states that have stockpiles and reserves, and also from our learning of why the price spikes happened in the first place, which was that California refiners were not keeping enough in inventory. And then when they had these explosions, Bahram’s chart was really striking, bracing really, how many there have been. That would knock production down, refineries offline prices would go up and they wouldn’t resupply from other sources to help buffer consumer impact. Both of those tools I think are really, really important, but they don’t counteract this type of Iran conflict situation we’re seeing.
(00:52:28):
It’s a global price increase. The gross gasoline refining margin penalty is one where we started a process and our chief economist, Gigi Morenos testified as well as a CEC economist. That’s a CEC decision, can’t speak for them. I think the economic theory supports it, but it’s very complicated in practice. Unfortunately though, I don’t think there’s any silver bullet for the situation we find ourselves in today.
Quinn Eide, Fossil Free California (00:52:56):
Thank you. All right. Thank you. Any other questions?
Speaker 9 (00:53:06):
For those of us who live in Kern County, we’re going to be affected. What does that look like for us and how can we be involved?
Bahram Fazeli, Communities for a Better Environment (00:53:18):
Engagement. I think Catherine is here. Catherine Grouper is here. Are you talking about how to get involved with the advocacy?
Speaker 9 (00:53:33):
It’s going to be affecting us here quite largely in Kern County and how do we be involved and take action a little more?
Bahram Fazeli, Communities for a Better Environment (00:53:44):
So there are a number of groups that are active in Central Valley, and I’ll be happy to connect you with them. And our vision coalition is actually that has a lot of groups in Kern County that are working on oil drilling and stuff. And I’ll be happy to connect you with those groups that are working on economic revitalization, making oil drilling, working on the implementation of 1137, which is the 3,200 feet buffer zone, and making the operations safer, holding them accountable, and a lot of other things. Yeah.
Josh Sonnenfeld, UC Berkeley Labor Center (00:54:30):
One question. We like questions. Ask questions.
Speaker 10 (00:54:36):
Okay. So this is for anybody, but there are quite a few good bills this session around bucket three. There were some good ones last year, speaking of the polluters pay, and I think what we saw was that lots of folks in the legislature just didn’t really have … There was the skittishness around oil and gas issues that we kind of ended up with SBT 37, which was filled with giveaways. So is there anything that you all would say is a good way to kind of push back on the oil messaging that we’re chasing refineries out of the state with our crazy laws and we’re being too mean to them because it really seems like that is how the legislature is thinking about it. So is there a way to kind of push back on that narrative and just this broader gas price piece?
Bahram Fazeli, Communities for a Better Environment (00:55:32):
So I’ll talk about the narrative and I’ll pass it to the experts on the gas price piece. So we need to not just win the battle of the narratives, but we also need to win the battle of the facts because when you go to the building and you talk to the legislators and their staff, they really don’t even know the facts. If you say, “Oh,” and it’s understandable. I mean, folks work on wide range of issues from education to this to that. I mean, this is pretty overwhelming. So it is the job of the advocates to really … And also I would say a lot of our great friends in the government agencies to really make sure that the legislators and their staff understand the facts. I mean, we sometimes, if you just watched the Senate EQ hearing last time, I mean, people are acting like it is the California regulation that caused the Valero to leave California, Valero and Benicia.
(00:56:38):
So that’s a lot of misinformation, a lot of disinformation. So we need to make sure that people really know what’s going on and present them with the information that then they can push back against, I think a lot of the false narrative that are being pushed out by the oil industry, but specifically on the prices, I will pass it to that.
Tai Milder, California Energy Commission (00:57:05):
Yeah. I think a couple points. One on the previous question, no California policy is going to be able to prevent the price spikes that are happening because of the Iranian conflict, but there are things we could do to blunt some of those price bikes and to mitigate some of the impact. And we will be watching very closely what the filings from the companies are about their profitability. And so I think the gross refining margin penalty is a unique tool that California would have to look at, whether these are sort of windfall profits or not. And so I don’t want to gain say the importance of using the tools. Likewise, for when we have refinery issues here, important to use those tools here and now to prevent the Iran conflict from getting as a baseline price increase from being worse. In terms of what industry is saying in California, it’s a very well funded campaign and has billboards and advertisements and a starting point is to remember why they have that funding and they have a very, very big megaphone.
(00:58:05):
I would remind folks that California has typically the highest refining margin in the world, the gross refining margin. So the profit from refining oil into gasoline is quite high here. Some companies at their executive leadership team are making decisions about where they have their assets. There are global trends. So there are mega refineries that are four or five times as big as our refineries in California that have been built up over the last decade or two. And so smaller, older, less efficient refineries are closing around the world, not just in California. We also see that Californians consume about 2.4 billion gallons less of gasoline each year. Let me say that again. 2.4 billion gallons less thanks to state policies, and 75% of our diesel is now from renewable or biodiesel. So there’s a lot less demand in California than there was before. So that does, I think, alter a company’s decision making around how much they want to be producing here.
(00:59:00):
At the same time, refining is a core part of our supply mix and DPMO’s view is that we need a diversified supply. I’ll leave it to others in terms of how to push back on specific messaging, but the Iran conflict is driving up prices as a core piece, and we’re going to see some pretty extreme profitability numbers from the industry once again.
Bahram Fazeli, Communities for a Better Environment (00:59:21):
Sorry, go ahead. So over the decades that we have worked with the oil refineries, our experience has been like in terms of creating safer and health protective regulation, the strategy of refineries has been to weaken the regulation and we go into the stakeholder agreement. First, weaken, second, delay, and third, kill. So we can delay and kill. And there has been times that we thought we agreed to something like, for example, on an HF regulation down in the south coast To come to the board meeting and find out they have actually cut a deal with some of the people on the board and they killed it the last minute. So that was when there was a lot of certainty and the economy was doing good actually. So you can imagine now that there is international chaos that the oil industry is taking advantage of this stuff to say that, well, let’s just stop everything.
(01:00:27):
Let’s drill more. Let’s refine more. Let’s roll back. Let’s permit a streamline. Let’s forget about CEQA. So this is what the oil industry is doing right now in the building. And if you go to talk to a lot of legislators, they are really scared.
(01:00:46):
They really need to hear from the agencies, DPMO and CEC that like right now, last year or right now, we are not in a supply crisis, but the attitude is that we are in a supply crisis. So even when we introduce a modest legislation like transparency on remediation, like SP 1259, that APEN and CV and CEJA are co-sponsoring. They’re like, “This is going to bankrupt the refineries. This is going to push the refineries to go out. ” So even for a modest legislation, even if I introduce a legislation, say, let’s paint the fences around the refineries green, they will suppose it because they will say this is going to bankrupt. So this is what we are dealing with. And you can imagine that more ambitious stuff about just transition is going to face real pushback.
Quinn Eide, Fossil Free California (01:01:33):
Thank you so much. Unfortunately, I have to cut you all off. I know there’s so much more to be said. I would definitely encourage everyone here. I know there’s a lot of expertise both on the panel as well as in this room. Continue these conversations over lunch. We are now taking a chance to move over to lunch, which is just outside.
Dr. Emily Grubert, Notre Dame (01:01:51):
It’s important.
Woody Hastings, The Climate Center (01:01:52):
Thank you, Quinn. Thank you. Yeah. Thank you all for being here. Just so folks know the slides. I know there’s a lot of dense information on them. The slides will be shared after the summit in the materials that we send out so you can drill down. Thanks for being here, everybody. Thanks again to Quinn and our panelists. Have a good lunch.