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Fossil Fuels Not Going Away, Even in California, WSPA Head Says

The consumption of fossil fuels is not going away anytime soon as the interconnectedness of all forms of energy gets tighter, according to the head of the Western States Petroleum Association (WSPA), speaking on an industry panel in San Francisco Thursday.

WSPA President Catherine Reheis-Boyd, one member of a panel examining the future of energy regulation in discussions hosted by the California Public Utilities Commission (CPUC), talked about "a new dance" among the oil/gas industry, utilities and other segments of the energy sector. Even with California's comprehensive climate change push that downplays the use of fossil fuels, there is more interconnection among energy sources than ever before, she said.

As well as helping produce it, "WSPA members are large consumers of electricity and natural gas, and they are involved in wholesale/retail marketing of electricity and natural gas," Reheis-Boyd said. "So there is sort of a new dance among us all." She acknowledged that regulations and other aspects of energy will have to change as the state, nation and world shift more to renewable forms of energy.

Her message was that the transition is likely to be longer than anticipated and include more fossil fuel than might be expected, particularly among the very active climate change advocates.

"When the U.S. Department of Energy looks out to 2040, they say 80% of our energy is still going to be coal, gas and oil," said Reheis-Boyd. California has 38 million people driving 26 million cars, and 92% of all transportation fuel in the state comes from the petroleum industry, she said. "Even if it’s off a bit, that is a pretty large number, and you put that in the context of California's pretty aggressive climate change initiative calling for 40% greenhouse gas emissions reductions by 2030, that's a tough [target].”

She stressed that there is a transition time for shifting off of fossil fuels, and the fact that California is the third largest transportation fuel consumer in the world, trailing only United States as a whole and China. "This puts in context the magnitude of the transition [to alternative fuels] that we're talking about," Reheis-Boyd said.

The petroleum industry that helps allow all of these people and goods to move has to have reliable and predictable supplies of both electricity and natural gas, and that is why WSPA has been closely involved in political and regulatory discussions surrounding the future of the Aliso Canyon underground gas storage facility. "We run steady state; you can't ramp up and ramp down a refinery," she said.

"There is an interrelationship in the energy system. It isn't just electricity separate from natural gas separate from transportation fuels, the system is now so interconnected and everybody is expanding roles and the roles are changing. That's why WSPA is out talking to more people, explaining how we see our role in the future," Reheis-Boyd said.

For various reasons, Reheis-Boyd and the other panelists from the CPUC, Southern California Gas Co. (SoCalGas) and the consumer watchdog group The Utility Reform Network (TURN) think California is in a unique position to take bold actions.

"With what has happened in Washington, DC, there is a unique window of opportunity in which political leaders across the state want to double down and see how to raise the bar for all of the initiatives we have under consideration," said Matthew Freedman, a staff attorney with TURN.

Edward Randolph, the CPUC's energy division director, and Freedman agreed that California has been applying an "all-of-the-above" energy policy, but going forward there will need to be more prioritization. Reheis-Boyd said whatever eventually is done needs to be done cooperatively and in a cost-effective manner.

While the electricity sector is still struggling with new market models and more distributed energy sources and customer choice, George Minter, vice president for external affairs and environmental strategy at SoCalGas, said the natural gas industry in the state has long had aggregation, customer choice and direct access for customers, and the market is divided into a core segment (smaller captive residential and small business customers) and noncore, the largest industrial and electric generation customers.

"The refineries, producers, power generators all buy their own gas, along with space in storage fields that the utilities and independent sources have," Minter said. "All we do is transmit and deliver and store gas."

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