California Gov. Gavin Newsom last week turned up the heat on climate change initiatives with a letter to the California Air Resources Board (CARB) in which he stressed state agencies to prepare for an energy transition that involves no new natural gas plants.
“The state’s draft carbon neutrality road map doesn’t go far enough or fast enough. That’s why I’m pushing state agencies to adopt more aggressive actions, from offshore wind to climate-friendly homes, and to make sure we never build another fossil fuel power plant in California again,” Newsom said.
The governor also noted that he would work to finalize the $53.9 billion investment into climate-related initiatives, which was included in the state’s 2022-2023 budget signed by Newsom in late June.
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In his letter to CARB, Newsom also requested the agency form a task force with the California Geologic Energy Management Division (CalGEM) to address methane leaks, adding that the state’s budget supports $100 million in funding to bolster a network of methane detection satellites. Newsom also highlighted another $100 million designated for CalGEM to plug orphan oil wells.
What’s more, Newsom requested CARB target removing 20 million metric tons (mmt) of carbon dioxide from the atmosphere by 2030, followed by 100 mmt by 2045. About $1.4 billion of the $53.9 billion investment is marked to go toward restoring California’s forests and woodlands to support carbon sequestration, according to the California Climate Committee’s (CCC) latest blueprint.
“Our lands are currently a source of carbon emissions, and we must prioritize sustainable management of these lands as nature-based solutions to sequester carbon over the long-term,” Newsom said in his letter to CARB.
“At the same time, engineered carbon removal is clearly needed to achieve the scale of carbon removal required to reach carbon neutrality,” Newsom said, noting that state agencies would facilitate additional carbon capture technology.
Taking Emissions Out of the Sky, Off the Roads
In addition, Newsom said he would also push “CARB to adopt an aggressive 20% clean fuels target for the aviation sector,” and urge the industry to “diversify fuels away from petroleum.”
In order to achieve this goal, Newsom also commissioned CARB to “consider an increase in the stringency of the Low Carbon Fuel Standard,” as well as collaborate with related agencies to transition refineries away from petroleum and toward the production of “clean fuels.”
Newsom also updated the climate blueprint to increase the state’s total investment to decarbonize its transportation sector to $10 billion over six years, a $6.1 billion increase. The move built onto a 2020 executive order requiring all vehicles be zero-emissions by 2035.
NGI’s Shaylon Stolk, senior energy analyst, noted that in order to support incoming zero-emissions vehicles (ZEV), as well as electric vehicles (EV), Pacific Gas and Electric Co. (PG&E), which serves 5.5 million electric and 4.5 natural gas customers across California, would have to upgrade its infrastructure.
“A major challenge for California’s electric grid is going to be PG&E. Whilst PG&E is technically a participant in CAISO, they are still an investor-owned utility, which has created conflicting interests for the company, including financial incentives to de-prioritize infrastructure updates,” Stolk said. “Even if PG&E complies with regulations and upgrades infrastructure, the area of the state covered by PG&E may have to play catch-up as far as being able to support a major influx of ZEVs/EVs.”
Wind’s Bolstering the Grid
“Logistically, investments in more energy production, such as the offshore wind leases, and more solar arrays, plus upgrades to high-voltage transmission lines, will have to run ahead of any major shift to ZEVs/EVs for public transit or private use,” Stolk said.
In his letter to CARB, the Democratic governor also set a new target for the California Energy Commission (CEC) to establish a plan to install at least 20 GW of offshore wind by 2045.
“California is home to one of the world’s best offshore wind resources in the world and I am confident that this clean, domestic source of electricity can play an important role in meeting our state’s growing need for clean energy,” Newsom said in his letter to CARB.
Newsom said the CEC should also work with federal partners as it targets more offshore wind development, as the Biden administration is also targeting to bring online at least 30 GW of offshore wind by 2030.
“Renewable energy production infrastructure is fairly quick to construct, given the modular nature of solar panels and wind turbines,” Stolk said, noting that meeting the charging needs for ZEVs or EVs could take about two to five years to ramp up production.
In May of 2021, Newsom joined members of the Biden administration to announce the state would be advancing with at least two offshore wind energy areas, including Humboldt Bay and central California’s Morro Bay. Earlier this year, the CEC approved a $10.5 million grant to add 1.6 GW offshore wind in Northern California’s Humboldt Bay.
Last month, Newsom signed the state’s sweeping 2022-2023 budget, totaling $308 billion, including the nearly $54 billion to achieve the state’s climate goals – one of the largest climate investments in history.
“The plan is the largest investment in climate initiatives in U.S. history so far, since the Inflation Reduction Act hasn’t officially passed yet,” Stolk said, noting that the European Green Deal, which passed in 2020 and called for about $112.4 billion, is larger.
Earlier this week, however, California’s Legislative Analyst’s Office (LAO) reported personal income, sales and corporation taxes are falling below the Budget Act’s assumption of $210 billion in tax revenue.
The Golden State’s LAO reported in an updated 2022-2023 revenue outlook that revenues are about 70% likely to fall below budget projections. Current analyses suggested revenues could be about $5 billion below the budget’s expectations.
Analysts also cautioned that economic indicators are suggesting “a recession is on the horizon.
“In the last five decades, a similar collection of economic conditions has occurred six times. Each of those six times a recession has occurred within two years,” LAO analysts reported.
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