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 (00:12:28):
Thank you so much for being here. My name is Woody Hastings. I am the Phase out Polluting Fuels program director for The Climate Center. Been with The Climate Center since 2010, and I’m just going to run through a real quickly here through some thanks to our sponsors kind of things and a few other things and then hand it off to our moderator Shruti, who will introduce the panelists.
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This session is the third and final session and the phase out polluting fuels track this earlier in the afternoon, we heard from folks around refinery transitions and we’ve now got two refineries in the state of California announcing that they are planning to close. So we are in a state of transition, and so we’re thankful to the Energy Commission and a resources board in the legislature for embarking on a plan to get a transportation fuels transition plan in place. So thanks again for being here. So thanks to our sponsors, Sunrun Peninsula Clean Energy, Heirloom, Bay Area Air District, GM, Clean Power Alliance, the Los Angeles Department of Water and Power, San Jose Clean Energy, Sacramento Municipal Utility District, AVA Community Energy, the Energy Coalition, MCE, First Community Choice Agency in the state of California launched in 2010. Marin Clean Energy now MCE, Citizens Climate Lobby, dcbel that they’re the ones that do the bi-directional charging system.
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Renew Home, Policy Pulse, Silicon Valley Clean Energy. And thanks to the individual donors who helped make the event possible, we’re also thankful to our promotional partners. 350 Bay Area, 350 Sacramento, Act Now Bay Area, California Environmental Voters, Center for Biological Diversity, Climate Action, California Climate Resolve, Coalition for Clean Air, and Sierra Club California. The QR code up here gets you to event leaf. By now, you probably all have maybe either decided not to dial into event leaf or you have dialed in. There’s the QR code. If anybody wants to capture that, you can. I’m not seeing any phones go up, so I will assume everybody has made use of that if they want to. And just finally the hashtag for our welcome folks. Latecomers. Glad to have you here. It’s hashtag ca Climate Summit. And with that, I would like to hand it over to our moderator, Shruti, who will give a little framing and introduce the panelists and take it from here. So thanks very much.
Shruti Sarode, UC Berkeley Law (00:15:22):
Hello everyone. Thank you for being here. My name is Shruti Roday and I’m a climate change research fellow at the Center for Low Energy and the Environment CLE at uc. Berkeley Law, as many of you know as BX one dash two, directs the California Energy Commission and California Air Resources Board to develop a transportation fuel transitions plan, which is a roadmap to guide California’s shift away from fossil fuels. This plan will outline how the state can ensure a transition that is reliable, safe, equitable, affordable, and aligned with the instant petroleum demand and carbs. Most recent climate change scoping plan and clee where I work is supporting this effort by helping to shape the plan through a collaborative and consultative process. For this, we formed a working group that is composed of representatives from environmental justice organizations, labor, environmental and public health advocates and relevant state, regional and local agencies.
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So, so far we’ve organized four working group meetings where we’ve explored challenges surrounding fuel supply and demand, including the complex realities of refinery closures. We’ve also discussed the implications for worker transition from refinery jobs to green jobs and impacts on the nearby communities to the refineries. In addition to these working group meetings, the agencies have also held community listening sessions in Richmond, Bakersfield and Wilmington. These are the communities that are directly impacted by refinery closures, and these meetings ensure that their voices are heard and their concerns are a part of the planning process for this transition. Ultimately, this process is about surfacing key questions, identifying research needs, and understanding the scale and timeline of planning required to navigate this transition effectively. To provide more background on the plan and the broader assessment, I’d like to introduce Quentin G from California Energy Commission and Quentin is the advanced electrification analysis manager at CEC and has played a leadership role in both the transportation fuel transition assessment and the development of this plan. With this, I’ll hand it over to Quentin.
Quentin Gee, California Energy Commission (00:17:48):
Great, thank you. Hi. Yeah, as Shruti mentioned, I’m Quentin Gee. I’m a manager of the advanced electrification analysis branch at the California Energy Commission. We work on a lot of different things pertaining to electrification, but we also look at transportation in its entirety. And so when we start thinking about transportation, we want to think about gasoline. That’s the big one. But let me give you a little bit of context on where we are. So what we do is we do a lot of forecasting. We look at the economic conditions, we look at what’s happening in the technology space in the market, et cetera, and we sort of evaluate out, we forecast out what we can expect over the next few years. This is critical as part of electricity system planning. It’s also critical as a foundational aspect of what we do sort of at the California Energy Commission overall, which is really trying to understand the way that energy unfolds.
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And we do this as a part of our integrated energy policy report. So we do these forecasts and what we can see is that zero emission vehicles don’t make up a very large portion of the total amount of cars now, but light duty cars is an example here, but they are anticipated to make a whole lot more a larger proportion by the time we get to 2040. And when you think about the miles travel too, because newer cars tend to be driven more like you’re going on vacation, you’re going to take your 2008 civic or you’re going to take the 2020 Corolla or whatever. So you’re going to drive the newer car more. So more of the miles are actually going to be from zero emission vehicles, but we are looking still at a large number of those with these combustion cars phasing out, we’re going to see a decline in gasoline demand, diesel demand, and other transportation fuels that are combustion based.
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Now there’s another bit of context here. So think that’s where we’re thinking of ourselves in the longterm. There’s another context that’s sort of like that phase down of the combustion vehicles could have some complications with it, right? It’s a good thing in a lot of ways, although we can talk also about other ways of thinking through transportation, but it’s a good thing to have fewer combustion vehicles on the road, both in terms of climate and air quality, et cetera. But there’s a flip side to it and it has to do with the fuel of those combustion vehicles, which is what we’re kind of here to talk about here in 2022. Maybe some of you remember this, maybe some of you don’t. But gas prices hit 6 21 a gallon on average, and I dunno if you can quite see that there, but that’s a 9 76 at a gas station I believe in the Mendocino County area, right?
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Pretty isolated area. Got to drive the trucks a long way to fill up all those stations there. So gas prices are more so one might think normally as demand for something declines, econ 1 0 1 as demand declines, prices decline maybe. But when you have such a concentrated market, there’s only a few players, I’ll talk about the players in a second, but in such a concentrated market, we can actually be faced with some difficulties associated with this transition away from fossil fuels. And maybe you don’t mind, someone wants to dry in their Hummer, whatever they want to do, that’s fine. But one of the things that we’re worried about, and part of the legislation Senate Bill X one dash two is worried about is not people that maybe want to choose to drive combustion vehicles, but people that are lower income can’t necessarily afford the latest and greatest vehicle. And that’s the balance that we have to deal with. That means that we have to do an assessment, which we completed last year, and I actually spoke about this last year at the conference. And then we also have this transition plant here, which is a sort of a broader scope, thinking about this challenge of declining combustion fuels. California Air Resources Board and the CEC are working on this together.
(00:22:07):
So let’s take a look at the major gasoline refineries. As Woody’s mentioned, we got some news last week that maybe a lot of us weren’t necessarily expecting one of the refineries up north closed or announced, didn’t close, announced that it’s going to close by law. They have to give us a one year heads up minimum, and that’s exactly what they did. So what I have down here, I submitted these slides before last week. So there’s a decline here. Phillips 66, that’s going away at the end of this year. That’s down to four in Southern California. And up at the top there, I had Chevron, PBF in Martinez and then also Valero and Venetia last week is Valero. And Venetia announced that they are going to shut down in I think April or May of 2026. So that means two refineries will be producing every single gallon of gasoline that you use to get here today that other people use basically anywhere north of Fresno is kind of where that’s going to be done.
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Or two refineries. What happens if one has an accident, if something blows up, there’s some other kind of shutdown. Now you’re down to one person or one refinery that’s really sort of controlling that market. So that’s what we’re worried about is market concentration and how do we get, ensure that there’s stable prices. We are a fuel island, so we only can export the pipelines. If you look at the East coast, there’s pipelines connecting all over the place. California, the only fuel pipelines of like gasoline, diesel, or jet fuel. The only fuel pipelines go out of the state either to Nevada or to Arizona. They can’t go into the state. You can’t go back and forwards. There’s no pipeline imports for that reason. So if we’re going to get gasoline, diesel, even oil, crude oil, that all has to come from marine cargoes. We do have some crude oil production in the state as well.
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We also have a unique gasoline specification. It’s called car bobb. Don’t worry too much about the details of that. If you want to learn more, talk with me after. And then there are some pipelines from refineries that send fuel to different racks so it’s not just at the refinery and trucked out from there, but there’s pipelines that spread across the state to some key terminal areas where they mix it with ethanol and sort of ship it off in those trucks that you see on the road delivering gasoline. But looking at, oh, oh yeah, okay, something happened here. I’m not sure what, but looking at this, basically ignore that jump at the end. That’s a error. But you can see that we looked at three different major scenarios and these scenarios all show gasoline declining in that captive market where maybe there’s only one major refiner or two major refiners at a certain point in time, the potential for price squeeze on consumers is significant.
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And so that’s what we’re worried about. The blue line is the most aggressive. That’s the one that the air Resources board has put out. And then the orange and the green lines are two different scenarios that we at the Energy Commission have put out, but it’s tricky. I’m not, yeah, sorry for the errors there. I’m not sure what happened, but the lines are pretty smooth for our forecasting purposes. So finally, some benefits and challenges for the transition, right? As I mentioned, the benefits, we can address climate change. We want to shift away from combustion engines, right? The state is committed to a hundred, 100% clean energy for all Californians. That’s our goal. That’s where we’re headed. We’re going to fight for that. We want cleaner local air. This is in our area of expertise, but the California Air Resources Board is very assertive about making sure that they get to those local air challenges.
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Although maybe some people may not agree with how much they’re doing, that certainly is a benefit. As we do decrease our dependence on combustion, we have environmental and energy leadership. That’s something that we pride ourselves on maybe as Californian, California is oftentimes pointed to as a leader, potential fuel savings, depending on how we can work out the electricity and get more stable prices. Gasoline can be, electricity can be a much cheaper fuel to drive around on. And obviously increased energy dependence might prefer to drive on sunshine from maybe a rooftop or from a power plant out in the desert rather than importing oil from countries that maybe we don’t think are very stable or have other challenges. Okay, some challenges, we’ve talked about this in the transition phase and some of the other speakers here are here to talk about some of these challenges. There’s a loss of tax base from refiners.
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Refineries are very large revenue sources for a lot of these local communities fund the roads, fund the schools, fund the fire departments. There’s also employment. A lot of the folks that work at these refineries, they’re high paying jobs and they don’t require a huge amount of education. They do require a lot of training and expertise, but these are what some might call sort of like good paying jobs. Well paying jobs challenges are going to be that price stability, like I mentioned, when you’ve only got one or two major players in a market and people need those. Transportation fuels definitely a challenge. Jet fuel is another thing that we have to think about. As much as we are transitioning away from combustion engine vehicles on cars, in trucks, et cetera, jet fuel is another big problem that doesn’t appear to be going away so easily and a lot of people love to fly. And then finally import export logistics. The ports can’t have 50 ships coming in all at once. So we have to think through those. So lots of different challenges throughout this plan, and that’s some of the things we’re going to look at and talk about today. So thanks. Should we,
Shruti Sarode, UC Berkeley Law (00:28:18):
Thanks Quentin. If you have any questions for him, we’ll take questions after all the panels are done with their talking. So the next panelist is Connie Cho. She is the senior policy advisor at the Asian Pacific Environmental Network apen. And prior to joining apen, Connie was Richmond staff attorney and she also served as a member of the statewide Environmental Justice Advisory Committee for the 2022 update to the AB 32 Climate Change scoping plan.
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Connie Cho, Asia Pacific Environmental Network (00:29:12):
So some of you heard from me a little bit this morning and hopefully I won’t be too redundant and can get into a few more details. As some of you know, I love getting into the details, but the Asian Pacific Environmental Network alongside communities for a better environment where I was an attorney previously are refinery communities. If you were in a panel earlier or at the plenary this morning, you’ll have heard that our communities are communities that bear some of the worst, most disproportionate health impacts, negative health impacts from pollution in the state of California. You can see here Richmond, where we organize, of course, the refineries along the Bay Area and in Wilmington where Alicia Andro was this morning or speaking this morning, you can see all of the refineries here concentrate in just a half mile radius in Wilmington.
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And our communities are like this because they were historically red line. So they are underserved and historically marginalized in many different ways, and we’re really grateful actually to this California Energy Commission for being able to acknowledge this in the transportation fuels assessment. So when I began working in Richmond in 2020, a lot of environmental justice organizers and advocates have come before me, but the 2012 explosion of the Chevron Richmond Refinery that sent 15,000 people to the hospital was still extremely potent. The memory was, everyone had a story about where they were that day, about the days after, about the difficulty breathing about folks who had cancer later and not just later from this incident, but really the community started to understand a deeper connection to the disproportionate twice, three times rates of cancer, developmental disorders, neurological disorders, and in relation to the refinery, actually the Bay Area Air Quality Management district path to clean air identified that this is actually the largest source of particulate matter in the Richmond San Pablo area.
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And also it’s also true for Wilmington Long Beach particulate matter and VOCs, I believe volatile organic compounds, cancer causing chemicals. This is the graphic of a worker who had to evacuate the refinery and he had to crawl through a fire. And these are all incidents that were types of incidents like this. The 2012 fire were actually completely preventable and a very important statewide process safety management PSM rule, essentially just a refinery safety rule that eventually became a gold standard bearer in the nation was implemented and as a result of a lawsuit settlement with Wispa recently has threatened to be rolled back. So just wanted to put that on your radar and in the coming days and weeks, we’ll be hopefully mobilizing around that.
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In any case, after the 2012 fire in Richmond, there was a long-term project folks had been talking about trying to envision a future without the refinery for a long time, but really started up in arms about thinking about a model called Just Transition, which I don’t have up here, but you’ve probably heard the phrase equitable transition, just transition and really thinking about what comes next after oil, what do we transition to? We talk about fossil fuel phase out, but what are we phasing in? And really thinking about building that out and doing a lot of analysis about what would we lose, thinking about the tax-based connections, thinking about how do we get money to fund a study that would calculate that, things like that. And so a lot of this thinking actually was then summarized and presented by a number of community activists and community members in this report through uc, Berkeley.
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And through that process, we began to really think about how do you operationalize a just transition? And the answer was a lot of money. And so I began working in earnest and thinking about which we talked about in the previous Phillips 66 panel, answered a little question at the very end, but we began thinking in earnest about how can we bring in revenue that we dedicate to a just transition? How do we not become more reliant on the refinery and phase out and phase something in? And the answer to that is really getting money to spend on economic diversification to save actually. So a lot of for shot pre-planning was really, really needed. And so you can see this quote here from Council member Doya Robinson, and some of you may have met council member Claudia Humanez came here before, but they said, we’ve seen coal country, we’ve seen Detroit when the auto industry crashed.
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Industries have fallen before us and we know that we need to plan now and we need a strategy now. And so we were able to run a tax initiative and end up with a half a billion dollar settlement, which is the most that Richmond’s has ever seen. Fun fact, it was also the time that some of the previous tax settlements with Richmond were back to expire. So it was a well timed settlement without entering into negotiations with no legal leverage at all. So this is all to say that these initiatives and this type of thinking that you see publicly has been happening in the community for nearly a decade now, at least that I can track. And another effort. When the Marathon Refinery and Martinez first announced closure, and pretty soon they joined the bandwagon to produce biofuels on a much smaller scale and joined and with rodeo, the Phillips 66 refinery in rodeo to do that, they laid off hundreds of workers essentially overnight.
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And disclosure was in the short term a surprise, but in the long view was actually not a surprise. We knew that within this window of time, environmental justice advocates and analysts, attorneys like Ann Alexander there in the audience or steelworkers, who as you heard earlier, Tony, I’m going to butcher his last name, but ti, who fought for Superfund for workers thinking about the end of the oil era, really predicted this moment. And so in that moment, we came together with a number of labor organizations. Apen co really convened a community table and work group outside of this partnership table, but worked with the Labor Council, the Counter Costa Labor Council, UA building trades the steel workers, and had the support of facilitators like the Bluegreen Alliance in order to have a very, very rigorous three year process of coming to consensus on a series of 34 recommendations and some analytical context for that.
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We also commissioned other analytical reports. We were able to use some state funding for this, but it was really building on decades of trust that had been developed, especially around refinery safety and community safety and shared interest in the success of the tax base going forward, but also was a challenge. So we’re very proud of that report. Everyone should look at it. And I wanted to note that LA also had a very similar kind of task force strategy. It was a public private partnership, which you’ll note and had a number of stakeholders. I know Communities for a Better Environment was a part of that and a number of government stakeholders as well. This was really thinking about oil extraction. Of course the oil extraction buffer zone fight around residential areas has been going on for over a decade. And really thinking about what this worker transition looks like with community and community envisioning and what communities need. This was actually just the start of, and I would also say the Contra Costa process. These are really just the starts of the kinds of planning that we really need in this state. And we did it because we weren’t seeing anybody else do it.
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And so just before, I want to say that any of our state planning really, I hope would end up building on these local strategies. And I also want to note, which I’ll come back to later, but think about how long these strategies and the consensus developed between environmental justice communities and labor, how long that had to take and the kind of trust that had to be built. So what kind of state process would you envision when thinking about how many agencies, how many issues, how many communities need to be involved? Might take a little while, but we would need to get started now. I want to take a moment to talk about barriers to this kind of transition. One of them is the idea of fossil derived hydrogen. For those who don’t know, and maybe I’ll get a quick time check here, but it’s methane in fossil gas in hydrogen out, some methane leaks out some CO2 out.
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And so this is not a clean process, I don’t think I have to really go through the rigorous details of that for you to understand that this is not a clean process. And in fact, none of the climate modeling out there uses fossil derived hydrogen. And in fact, the California Climate Change scoping plan or our California’s climate blueprint doesn’t really use fossil derived hydrogen either. It actually calls for renewable, but a lot of the proposals around hydrogen in this state actually have fossil hydrogen. So I leave with you this goose. When you see the word hydrogen anywhere, ask yourself how is the hydrogen made?
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There’s another funny process that happens in California wherein on paper you can declare fossils derived hydrogen to be renewable. It is astounding. It is. You actually talk about buying pollution, paying to pollute. You can purchase the environmental attributes of a dairy farm that is capturing methane gas from their manure process, manure well from the cows, but which also is a whole separate panel on how that accounting is done and whether that’s actually clean or not for the environmental justice community and those who are seeing birth defects in the Central Valley and their children because of the ammonia in the water, I think they would argue that it is not actually a clean process and is not being appropriately accounted for that aside, it has an inflated carbon crediting value. So I’ll just say that if you accept that, you can add that inflated crediting value for something that isn’t actually clean and just add it on paper to just fossil derived hydrogen in Wilmington, California, the same fossil derived hydrogen that’s a part of the oil refineries that’s sending fossil derived hydrogen to oil refineries for the process of oil refining. And in addition to that, the, I’m going to end my tangent on fossil derived hydrogen here, but this is all to say that there’s a lot of climate accounting. We’re really dependent on getting the calculations right. The problem is when you look under the hood, when there are really obvious US accounting gimmicks like this, we really have to ask ourselves, are we actually trying to solve the climate crisis?
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So another aspect of, so that previous slide here, this is about, these are processes that happen through the low carbon fuel standard process in California. And the low carbon fuel standard also has not just a sort of crediting program, but also refinery investment credit program wherein you can say I’m improving a process or making it more efficient to have less pollution. And this process will then give you some credits, right? And say, oh, I don’t need to reduce my sort of offsets the transportation fuels that I’m creating as a refinery. So this project was, so the Chevron refrigerator refinery received a number of LCFS credits. So compliance obligations, let’s say we fulfilled my compliance obligation instead of say they might’ve fulfilled their compliance obligation otherwise by investing in electrification in California. So that’s the alternative. But instead, they said we improved the hydrogen facility at this refinery.
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What that’s resulted in is record levels of flaring. And for those who don’t know what flaring is, it’s all the terrible pictures you see coming out of refineries or it’s a giant emission of concentrated emission of pollutants that come out of the refinery. And most of the flaring events is actually at Chevron’s new hydrogen plant, right? A refinery is very large. There’s thousands of smoke stacks there, but it’s really these hydrogen plants and actually the hydrogen plants connection to the refineries that are actually huge hazards, not just in terms of pollution but also in terms of safety. The second red herring that is a big barrier to this real transition problem that we have is biofuels. The more the state invests in biofuels instead of say mass transit, which is an economic multiplier for our communities, which is much more accessible and cost effective of an investment.
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The EPA as God bless the EPA, this was one of the last things. The previous administration’s EPA published before there was a transition, and this report concluded the Federal Biofuels Renewable Fuels Program, the effect of the RFS Renewable Fuels standard has a modest negative impact effect on the environment, including air and water quality, water quantity, ecosystem health and biodiversity, soil quality, invasive species, and international impacts. So this begs the question, why are we still supporting and subsidizing crop based biofuels in California? Another report from this environmental integrity project noted that biofuel manufacturing plants, there’s actually not a ton of research out there. We’re actually contracted with UCLA and uc, Berkeley to do a study. But biofilm manufacturing plants, including renewable diesel conversions, which are like the ones that P 66 and Marathon Phillips report releasing four times more of hazardous air pollutants, right? A number of carcinogens and a number of irritating toxic pollutants.
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So the results of the state transportation transition plan are still pending, are esteemed moderator Shruti, who has been an excellent facilitator of that process. I will note that process has yet to come forth with a draft report, any draft modeling. But when it comes out, I would ask you how much I would ask you to look at how much hydrogen is in there, how much fossil derived hydrogen is in there, how much renewable yet not actually renewable hydrogen is in there, how much biofuels are in there? Just something to look for and to summarize, which a number of the reports that I flagged for you earlier in the process, we do have a set of policy priorities that we would like the state to look at. And of course these were developed for local and county level, but I think they’re very applicable for the state level and can get more into that discussion later.
Shruti Sarode, UC Berkeley Law (00:46:48):
Thank you, Connie. That was a very interesting presentation. I forgot to time check because it was so cool. The next panelist is Tim Frank. He’s a policy advisor for the Construction Trades Workforce Initiative, and he currently serves as a board member of both the Sierra Business Council and as a board chair of Good Jobs first. And he’ll give us some labor perspective on this process.
Tim Frank, Construction Trades Workforce Initiativ (00:47:12):
Well, I’ll add the hats that I’m actually wearing this afternoon. So I’m a board member of the Construction Trades Workforce Initiative, which is the nonprofit partner of the building trades in Contra Costa, Alameda, Napa, and Solano Counties. And we actually are branching out. We are doing work in the Baltimore DC area and some of our policy work now actually spans an area that runs from Santa Barbara all the way up to the north coast along the coast, not in the Central Valley, but along on the coast. And so the Construction Trades Workforce Initiative works to create middle class careers for women, minorities, residents of low-income communities. The justice impacted veterans. These are cohorts that have been targeted in project labor agreement targeted hire programs. And we were sort of the entity that was formed to create an institutional support for those programs. Just to give you a little bit of background about the construction industry, about 70% of the construction workers in California come from disadvantaged communities.
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So you saw the map earlier about the redline communities. Those are the kind of communities where we’re actually recruiting most of the people that go into this work. And the reason for that is pretty obvious. I mean, if we send a recruiter out to a high school in Palo Alto, they don’t get anybody. It’s a waste of time. But you go to East Palo Alto and you get a line of people that want to actually do this kind of work, and that same thing plays out everywhere in the state. So that’s where we recruit, and it’s been true for quite some time. And so what the unionized construction industry does is it provides a platform that combines a very rigorous training with sort of a regulated a pay regime. So a journey person for the laborers gets to earn a prevailing wage, and in order to earn that prevailing wage, they first go through an apprenticeship program.
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And these apprenticeship programs give people everywhere from a low end of about 240 hours of classroom training to about 1100 hours of classroom training for the most skilled crafts and anywhere from three to five years of supervised apprenticeship. And that combination prepares people for to do more skilled work and to earn a higher income. And then they get the institutional backing of the union that allows for a number of benefits, one of which is just that they have a lot of support if there’s any kind of management dispute. So they don’t get abused on the job. You don’t find discrimination on the job. Women make the same amount as men, minorities make the same amount as the white workers, et cetera. And that’s something that does not happen on the non-union side. So in the unionized world, you actually get a lot of equity and you have the opportunity for the union to provide for economic mobility.
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The dramatically improved lifetime earnings of somebody who gets to have a union as opposed to a non-union construction job is pretty significant. They get better wages, they get paid healthcare, and their healthcare isn’t just individual healthcare, it’s family healthcare. They get a retirement, all of that covered by the union. And for the cohort that we recruit from, that’s a big, really important benefit. It’s economic mobility for what otherwise would be a low income population. So it’s good for the economy as a whole and it’s good for social equity as a whole, but it also improves the quality of the work and it creates a system for creating a trained workforce that is really going to be incredibly important to the transition. Because if you look at the transition from a fossil fuel economy to a clean economy, about 60% of the actual work is construction work. That was an analysis done by the uc Labor Center of the state scoping plan. And so the construction industry is central to this, to making a successful transition. And if we want it to be a just transition, then we need to actually pay attention to the quality of the work and to the safety of the work and the training associated with it. And the units are a critical partner in this exercise.
(00:52:00):
So just something to know about the utility in the fossil fuel industry. These are some of the most highly unionized parts of the entire economy. So when we talk about a just transition, one of the things we want to do is sort of create a benchmark. We’d like to see the green economy reach the same kind of performance level as the fossil fuel economy in terms of paying people well, giving them a safe workplace, giving them union backing, et cetera. And that’s possible, but it won’t happen by accident. It will only matter. It will only happen if we all work together and establish the rules that allow that to work. The thing you have to understand about union engagement in the economy is it’s a rule-based approach. So it’s not just letting every individual figure out a relationship with an employer, you’re establishing a professionalized, a system of representation that has rules associated with it, and it provides a lot of community benefits.
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And this is something we recognized back in the thirties when the labor movement was part of the New Deal and there was a, it’s part of the social contract that America wrote in the 1930s, and it’s been eroding for the last 40 years as union density has been going and low wage employment has been going up. And unfortunately the transition we’ve seen happening over the last few decades in the energy industry has actually not been helpful for this. You look at the rise of the residential solar industry, and it’s been a disaster for us. Almost all of the workers is non-union work and they make a lot less than say, union electricians do. And that’s a problem. So if we want to make the transition, just there’s a reason to work with labor to find a rule set that will actually make sure that the jobs are good jobs.
(00:54:04):
I should note that the idea of planning this transition really thoughtfully is a great one, and I really appreciate the fact that CEC and CARB are working together on this plan. I do have some critiques of the draft that’s been developed so far, and I just wanted to share those with you. So for instance, if you look at the policy recommendations that I lifted from a PowerPoint presentation that I saw somebody from Car Give, I dunno how many months ago, but it was some while ago, there was a discussion of storage of fuel blends of price stability and estate ownership, imports, demand strategies including ev access, VMT reduction and fuel conservation. So I just wanted to give you a quick feedback on all of these little policy pieces here. So to start with storage, the challenge I think here is that the model I see developing is one that is looking at the fossil fuel industry and just thinking in a sort of a vacuum looking at this, what can we do to beat these people into submission?
(00:55:17):
So one of the challenges, I mean I understand why you might think that way and think that’s a good idea, but if you look at some of the ideas that are being put on the table or asking all of the refineries to build substantial new storage capacity, and the reason to do this is if there’s more storage capacity and there is a momentary loss of capacity, then the storage can make sure that there’s enough supply to sort of even out the supply so that you don’t have a price spike. And a price spike is something you want to sort of provide so that consumers don’t pay. But if you look at it from the other perspective, the workers are looking at this and they’re saying, okay, so we’re asking of each refinery that they actually make substantial new capital investments in an environment where those investments aren’t really likely to last for more than another 20 years, because we’re talking about a transition where we’re going to be phasing these very expensive refineries out of business.
(00:56:16):
So if you do that at the same time and as you’re asking them to add all this new storage capacity, you’re not thinking about helping them with the entitlement process, then you’re leaving them vulnerable to a process where they can be gained and the cost can go up and they can fail because they can’t get the entitlements that they need to actually build the storage. So it’s not a recipe for success. And if at the same time you’re thinking, well, gee, in order to protect against consumers facing price spikes, we’re going to apply rent control to the whole gasoline industry and impose public costs pricing controls, then that actually is sending a signal that scares the industry. And that’s the kind of signal that delivers for us the loss of refineries. And it is not just one, we now have two more refineries that we’re at risk of losing in California.
(00:57:06):
And the problem is that if we lose these refineries, the actual risk of price spikes for consumers are going be much higher than what we’re mitigating by trying to impose the storage requirements, et cetera. So what we would really like to see generally, I mean I’m going to run out of time, is an approach that instead of trying to spend so much of its focus on regulating the existing fossil industry to focus more on an investment and a pro-growth approach, that’s looking at building up the renewable alternative. That’s essentially the energy policy of the Biden administration and think what you will about the Biden administration overall, their energy policy was actually pretty good, and they did a great job of putting in place what was supposed to be a plan for investment that would last for a decade or more, building up the renewable industry, and as they were doing so being very focused on making sure that the new jobs that they were creating were good jobs.
(00:58:15):
And so California has an opportunity to step into the gap and trying to fill what may be a vacancy, a gap, a vacuum, depending on what happens at the federal level. And we don’t know exactly how that’s going to play out, but we should expect that we’re going to need to do more to compensate for the lost leadership at the federal level. There’s a lot of sort of details that I think that are important to think about. If you’re just looking at the liquid fuels industry, you’re missing the opportunity to think about the system as a whole. We should be looking at every aspect of this transition from building renewable power plants to doing virtual power plants, putting in energy storage systems, et cetera, and thinking about how can we make sure that public programs that are encouraging these programs, this development and these industries, how can we make sure that they’re creating good union jobs?
(00:59:21):
We support demand. I’m running long on this. We support the idea of demand management. Zev access should be not just for low-income people, but also for construction workers. It’d be a smart play. Construction workers drive more than anybody else. We don’t have the opportunity to shift to transit because we have to carry our tools. So it would be a smart investment for the state to actually think about a zev access. It’s deliberately targeted for construction workers. That would be a way to do us a favor. The VMT reduction is something you’d be surprised how much we actually support, because even though we mostly drive, rather than use transit, we build transit systems and we build TOD and we get more of the hours doing TOD construction than we do building sprawl. So there’s a reason for environmentalists to actually work with the construction trades around a positive agenda around all this stuff, and we just need to pay attention to all the detail.
Shruti Sarode, UC Berkeley Law (01:00:18):
Thank you. Thank you, Tim. Okay. We have 10 minutes for audience questions. Yes, please go ahead,
Speaker 6 (01:00:29):
Frank. Is that you? Yeah. What are virtual power plants I don’t get and the point you’re making about?
Tim Frank, Construction Trades Workforce Initiativ (01:00:36):
So a virtual power plant is basically just a two-way communication system with the grid. So you have an implementer who has, you could say 500 homes that they have established a contract with where the implementer gets to control a battery or solar system on your property to replenish the grid at a time when there is a peak. So that the normal relationship with the grid is that you as a consumer basically just buy power and that’s it. But if you’re participating in a virtual power plant, you can put a little bit of power back onto the grid. You can have a battery that somebody else has ownership of some capacity of that they can use during an emergency. Yeah.
Speaker 7 (01:01:34):
Hey, I’m working with a great group of people that are working on the Polluters Pay Climate Superfund Act, and I don’t know if you’ve already heard about it, but we have quite a bit of opposition come from oil groups because of what you’re saying, good jobs, and we get that. But this is a economic, it will benefit the economy, bring in money. So we see it as something that can fund the transition which we desperately need. I’m wondering what the communication barrier is there if oil companies just have this strong poll to communicate to laborers and unions better than we do. I had love your insight on that.
Tim Frank, Construction Trades Workforce Initiativ (01:02:14):
Well, first of all, the fossil fuel industry employs all union labor. I mean, it’s one of the most unionized parts of the entire economy. Now, if the environmental movement and folks who are advocates for renewable energy and for energy efficiency had pushed the CPUC and other entities to actually think about creating good union jobs from the energy efficiency work we’ve been doing over the last 30 years, then we would actually have a unionized workforce that was ready to say, Hey, we’ve got a stake in that. But instead, you have a largely non-unionized workforce and the unions are actually kind of pissed off about it. So can get that out. We can actually, there’s an opportunity from Mulligan here. The environmental community can double down on working with unions. And this is exactly what’s happening in Contra Costa. I can tell you that the ua, which represents the workers, the largest set of workers in those refineries is at the table working with apen.
(01:03:11):
And it’s a very productive conversation. We’re looking for the alternatives that will give us a future, but you have to make sure that you’re really intentional about that because when I see people get up and say, and I’m for a just transition, it sounds an awful lot. Often I live in the land of the Ohlone people, but then what am I actually doing for the Native American community? And it’s the same kind of empty promise when we hear talk about the just transition and what we need to do is make it real. And so that’s about hard hitting policy and that’s about making sure that we’re making investments that carry requirements so that we’re creating good union jobs.
Quentin Gee, California Energy Commission (01:03:53):
Onto that. One of the things we have, we’ve been having a series of work group conversations, and some of the things that we’ve heard are that some of the jobs that are at these refineries, even though there are other union jobs out there, these jobs at the refineries do pay a lot more. And so that is something like wage parity is I think an issue. And that’s probably one of the things that you’re running up against. I don’t know the details of it, but how do we get lots of good paying jobs? That’s one of the big challenges where we’re really trying to work through. Yeah.
Speaker 8 (01:04:32):
Hi. I think my question is for Connie probably, but others certainly could answer. First of all, apen is an awesome organization. Thank you for all the work you’ve been doing in Oakland and everywhere else in East Bay. Really appreciate it. So I think the general, except the general thought is that over the next, whatever, 10, 15, 20 years, we want to move our transportation system to be all electric. That’s how we’re going to solve our climate crisis and reduce other pollutants as well. But we’re probably not going to get to a hundred percent electrification in 10, 15, even 20 years. So there’s going to be five, 10 x percent in other fuels. So the question is, sorry for this feedback. The question is that last five, 10, 12% percent, whatever that is, do we want that to be diesel and gasoline or would we like that to be hydrogen from electrolysis, which is cleaner as we get RRP S ramps up and maybe some RNG in the heavy duty sector. If those are our two choices, what would you prefer? We’re not going to get to a hundred percent electrification in the next 15 years or so. So that’s my question for anybody. And again, thank you for your great work.
Connie Cho, Asia Pacific Environmental Network (01:05:45):
Yeah, thanks for the question. So we did actually, the environmental justice, a set of, I think it was multiple coalitions perhaps went through a process with gridworks, a multi-year process of learning, really consulting with a lot of academics and coming to consensus on what truly green hydrogen looks like. And I think you’re right that there’s a hard to decarbonize last mile that really needs that r and d money and needs, those electrolysis, solar based, wind based kind of as investments. And unfortunately, we’re just not seeing that be the standard, and that’s the consistent investment. Even if there is electrolysis, it’s blended with fossil derived hydrogen, and that’s actually counter to the climate modeling. So we would actually love some integrity in that process. And I think that’s not what we started by seeing and then have seen some of it too. So I think that’s actually an open question. I think at the very start, because a lot of it was fossil derived hydrogen, there was a huge amount of pushback. We didn’t see these guardrails. There was actually conflict between the state and actually a lot of federal advocates or people who put the IRA in place, there are people at the treasury department. And so I think it’s been mixed messages from California, frankly. But I do think that EJ groups are open to that.
Tim Frank, Construction Trades Workforce Initiativ (01:07:04):
And I’ll also note that there are other technologies. So for instance, in Contra Costa County, there are two plants that are actually on the drawing boards right now, which would actually take the compost stream and bifurcate it. So you take the higher quality compost and actually turn it into a proper compost. So it goes into gardens or it gets used in agricultural context or whatever, and you take the contaminated stream and you divert it to a program that actually can turn it into hydrogen. There’s two projects.
(01:07:40):
(01:07:40):
This is another approach, and it’s not a silver bullet, it’s only a sliver of the ultimate solution, but it’s the kind of thing that we need to be open to. Is it being smart about picking the little pieces? I mean, the thing about the energy transition is that it’s a big complex mess and there’s no silver solution. There’s only lots and lots and lots of little solutions that if all done can get us to where we want to go, and the goal is just to avoid the bad solutions, that real honest ones. But there’s a lot of things that we need to get right.
Quentin Gee, California Energy Commission (01:08:21):
Yeah. Real quick to get to your point, a really good point that I think of the last bit there, the way that’s going to happen ultimately is going to, these are going to be the vehicles that are left over that they’re 20 years old, let’s say, right? These are going to be combustion vehicles primarily. And so you’re going to need what’s called a drop in fuel if you’re going to keep operating them. And you don’t want it to be petroleum, it’s going to have to be either bio-based or it could be what’s called an efu. That’s where you use chemistry, kind of like with the way you might generate hydrogen from electrolysis, but in a more complicated process to create hydrocarbons from electricity, water, carbon dioxide in the air. You can sort of do that complicated process and you can make a fuel that does look a lot and burns a lot like either diesel or gasoline or maybe even in theory jet fuel.
(01:09:11):
So that is an opportunity. The one thing I would point out with that is that it’s going to take a lot of electricity to make the amount of fuel that you’re looking for. And one of the big problems with combustion vehicles already is that they’re basically about 25, 30 5% efficient. So a hundred units of energy goes in, you get 25 units of motion in your wheels. So you’re using a lot of electricity to generate a fuel that wastes a lot. So that’s going to be a difficult thing at the very end, but definitely a challenge.
Shruti Sarode, UC Berkeley Law (01:09:44):
Somebody at the back also had a question who you didn’t see right next to you.
Speaker 9 (01:09:53):
So Colin Murphy from UC Davis, ITS. I think my main question is mainly for Quentin. He touched on this briefly, but as refineries ramp down their production, they can’t stop producing one fuel in another, have to produce the full slate. And so in the near term, we’re seeing biodiesel, renewable diesel has displaced 80% of the liquid diesel in California. And that trend is likely to continue in the near term. What’s the solution? How are refineries do you think? Are they going to keep operating and what are they going to do with the diesels all just export? Or how much flexibility is there for them to maybe shrink the diesel part of the slate and prioritize other fuels?
Quentin Gee, California Energy Commission (01:10:30):
Yeah, there’s only so much flexibility they can have. So a barrel of crude oil, you can’t turn it all into jet fuel, you can’t turn it all into gasoline or all into diesel. There’s a little flexibility on the edges. So what we’re seeing now is because there’s so many biodiesel, renewable diesel imports and production in state, we are seeing basically that we’re starting to export fossil diesel, not in very large numbers, but we are exporting it. We can try to, as demand for gasoline declines, we expect gasoline to decline faster. About 60% of a barrel of crude turns into gasoline when you refine it. So as that declines, you can maybe try to squeeze a little bit more diesel, a little bit more jet fuel out of it in replacement of gasoline. But we think it’s hard to know what the refineries have planned this shutdown or the announced shutdowns or challenges that we’ve seen that we weren’t necessarily expecting. So it’s hard to know how they’re going to respond exactly, but it is a complicated problem. And if gasoline is nothing or gasoline demands really, really low, we are worried about what’s going to happen with the jet fuel demand. And that’s likely going to mean if people want to continue to fly and there’s no scheme to address the sustainability of that one way or another, it’s going to mean that we’ve got to import it from other places. And that is a logistical problem in and of itself.
Shruti Sarode, UC Berkeley Law (01:12:00):
Thanks, Quentin. Unfortunately, we’re out of time and we’ll have to end this session right now. Thank you so much everybody for participating in this discussion. Thank you to our panelists as well.