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AUG 1, 2017
The ambitious plan set forth by Senate President Kevin de León (D) would set limits on California’s electrical grid hydrocarbon consumption and aim to gradually increase renewable energy consumption in the coming decades. It would set in place a goal to produce 60% renewable energy by 2030 and 100% renewable energy by 2045 within California’s electricity grid.
California has the largest GDP of any state in the United States at $2.6 trillion, roughly 14% of the entire nation’s GDP. A transition of California’s powerhouse economy to 100% renewables within the electrical grid is a monumental task and will make it hard for other states to not take notice. Massachusetts is another state that is considering a bill requiring 100% renewable energy use by 2050.
This comes at a time when President Trump has pulled the United States out of many climate policies, including the Paris Agreement. Kevin de León and Jerry Brown are determined to show the world that California’s energy future will not be dictated by the sitting president. Given the 180-degree change in climate policy from President Obama to Trump, it is not surprising states must decide in the short term their own stance and actions associated with climate change.
If California passes the legislation it will sit alongside Hawaii as the only two states that will require 100% renewable energy use by 2045. However, there are stark contrasts between Hawaii and California. Hawaii is not a hydrocarbon producing state, which means it must ship in hydrocarbons at high rates. Compare this with locally produced renewable energy and the economics start to look awfully appealing. In addition, Hawaii ranks 40th whereas California ranks 1st in terms of population. This means California will require significantly more energy infrastructure as compared to Hawaii.
Significant Barriers To 100% Renewable Energy In California
There are many upsides to transitioning the state to 100% renewable energy. You can likely name many of the upsides including pollution reduction, reduction in carbon emission, less reliant on a finite commodity, etc. However, there are also significant costs, hindrances, and downsides associated with California transitioning to 100% renewable energy. These tend to get less press but are vitally important to understand and plan for.
California currently imports about 33% of its electricity from outside of the state. Of that 33%, 6% is from coal. This is compared to the 25% of energy imported into California in 2010 from outside states and it’s clear California is headed in the wrong direction in this category. California will need to flip the trend in energy importing and begin to produce enough energy to become self-sustaining. Not an insignificant task.
California is also the third largest oil and gas producing state, despite what Californians may tell you. California produced on average 500,000 barrels of oil per day in 2014, third to Texas and North Dakota. While the bill does not necessitate a specific reduction of oil and gas production within the state, it will limit oil and gas use for energy production within its electricity grids. In 2015 the state of California derived 44% of its electrical energy generation from oil, coal, and natural gas. In addition, 30% of California’s electrical energy generation was from outside of the state sources with undetermined percentages of renewable vs. non-renewable energy sources.
The oil and gas industry supports approximately 456,000 jobs in California, which equals $38 billion in Californian’s pockets from well-paying oil and gas jobs and accounts for 3.4% of the states GDP. In addition, California receives a kick back for all oil produced in the state, equaling $21 billion in revenue. As this bill doesn’t directly limit oil and gas production within the state there is no immediate risk to the economic benefits of the oil and gas industry. However, California while converting its electrical grid to 100 percent renewables will still be producing large amounts of primarily natural gas. This will continue to be something California must grapple with, being the third largest oil and gas producing state in the country, yet setting its sights on 100 percent renewable electrical grid.
Another hurdle is converting power systems from conventional oil, gas, and coal within the electrical grid to renewable sources. As you can see in the table below, California’s energy mix includes 4.2% coal, 39.8% natural gas and 29.6% unspecified (a mixture of renewable and oil and gas sources). That means California will need to switch at least ~45% of its energy system and infrastructure, requiring time and money.
Table of California’s electrical energy generation
California Vs. Texas – Battle Of Energy Titans
California (199,038 GWh) is currently the 4th largest renewable energy producer in the United States behind Pennsylvania (214,811 GWh), Florida (238,094 GWh), and Texas (455,532 GWh). By percent, California is the 8th highest in percent renewable energy, while Texas produces over double the amount of renewable energy as California. Given California’s significant energy consumption they will likely need assistance from states like Texas in building systems large enough to supply consistent renewable energy to the state.
With regards to energy, California and Texas have many similarities. Both are large oil and gas and renewable energy producing states. Both rely heavily on the energy industry for their economy and both are large, populous states. However, there is certainly a differing mentality in how each state views the traditional oil and gas industry.
If, and likely when, California passes into law 100 percent renewables by 2045 we will see the continuation of a global energy transition. Both California and Texas fully recognize the energy transition yet appear to be motivated differently. California is motivated by a cleaner environment and lessening the impacts of climate change. Whereas Texas is motivated capitalistically in seeing renewable energy and the energy transition as an economic opportunity.
Motivation aside, the coming decades will present an incredible match between two energy powerhouses. And the winner, you and I.