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�California and Western Energy Lecture Series:��California Climate and Energy Policies� �

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Dian Grueneich

Precourt Energy Scholar, Precourt Institute for Energy

Stanford University

Dian.Grueneich@Grueneich.com

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April 10, 2019

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Topics

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  • What is Policy and Who Makes It?
  • California Climate Goals and Strategies
  • California Clean Energy Goals and Strategies
  • Achievements, Challenges, and Innovation Opportunities
  • Closing Thoughts

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What Do We Mean by “Policy”?

  • The specific laws, regulations, and processes adopted by governments to support the development and implementation of programs and projects
  • Who is “government”?
    • International, national, regional, state, local
    • Legislatures, chief executives, agencies

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Who Creates U.S. Energy Policy?

  • Federal Level
    • Congress
    • Department of Energy (U.S. DOE)
    • Federal Energy Regulatory Commission (FERC)
    • Environmental Protection Agency (U.S. EPA)

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  • State and Local Level
    • Legislatures and Governors
    • State Public Utilities Commissions (PUCs)
    • State Energy Offices
    • City Councils/Publicly Owned Utilities

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  • Private entities (investor-owned utilities, companies, NGOs) do not create policies

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Policy Tools: Carrots, Sticks & Sermons

  • Carrots: tax incentives, subsidies, rebates, etc.

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  • Sticks: requirements (RPS, reliability standards), codes & standards, financial penalties, etc.

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  • Sermons: labels, best practices, media campaigns, etc.

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All Levels of Energy Governance Use these Tools and the Best Policies and Programs Use Them Simultaneously

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U.S. States are a Mixture of Regulatory Structures and Markets

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- Electric Choice, 2017

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Topics

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  • What is Policy and Who Makes It?
  • California Climate Goals and Strategies
  • California Clean Energy Goals and Strategies
  • Achievements, Challenges, and Innovation Opportunities
  • Closing Thoughts

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2016 CA Greenhouse Gas (GHG) Emissions

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Source: CARB, https://www.arb.ca.gov/cc/inventory/data/data.htm (July 11, 2018)

Emissions by Economic Sector

Energy GHG Emissions:

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  • Electricity – 16%

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  • Transportation including refineries – over 50%

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  • Buildings – 25%

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California’s Climate Goals

  • By 2020: return GHGs to 1990 levels (AB 32, 2006)
  • By 2030: 40% below 1990 levels (SB 32, 2015)
  • By 2050: 80% below 1990 levels (Executive Orders S-3-05 and B-30-15, 2005/2015)
  • By 2045: carbon neutral economy-wide (Executive Order B-55-18, 2018)

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California GHG Emissions, Historical and Goals �(1990 – 2050)

EO B-55-18

80% below 1990

40% below 1990

1990 levels by 2020

Photo: Associated press

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Four “Pillars” of Decarbonization (E3)

* Nuclear, Carbon Capture and Storage and emissions from Land Use, Land-Use Change and Forestry (LULCF) and black carbon are not included here.

Reduce non-energy, �non-CO2 GHGs

Energy efficiency & conservation

Electrification

Low-Carbon Fuels

Vehicle and freight electrification

Industrial efficiency

Vehicle efficiency & smart growth

Industrial electrification

Building electrification

Building efficiency �& conservation

Nuclear, Carbon Capture & Storage*

Biofuels

Renewables and hydroelectric

Soil & forest carbon black carbon*

F-gases, N2O, CO2 from cement

Methane (manure, dairy, gas leaks, etc.)

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CA’s Climate Policy Framework

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  • CARB adopts statewide framework in its Scoping Plan
  • 70% emission reductions: “command and control” (sticks)
  • 30% remaining – cap and trade
  • All emissions covered (“economy wide”)
  • Increasing focus – disadvantaged communities/low income
  • Emission reductions beyond energy sector are hard and costly; many require significant lifestyle change and impact jobs, communities, industries

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Other Elements of CA’s Climate Framework

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  • Low Carbon Fuel Standard (LCFS) – establishes statewide “carbon intensity” standards for transportation fuels supplied in CA
  • Sustainable Freight Action Plan (2016) – 100,000 zero-emission trucks and equipment by 2030; improve freight system efficiency 25% by 2030
  • SB 1383 Short-Lived Climate Pollutant (SLCP) Reduction Strategy – Reduce methane and hydrofluorocarbon (HFC) refrigerants 40% and black carbon 50% below 2013 levels by 2030
  • SB 375 Sustainable Communities - smart growth
  • SB 1386 Integrated Natural and Working Lands Action Plan – Secure CA’s land base as a net carbon sink (draft issued Jan. 2019)

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Topics

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  • What is Policy and Who Makes It?
  • California Climate Goals and Strategies
  • California Clean Energy Goals and Strategies
  • Achievements, Challenges, and Innovation Opportunities
  • Closing Thoughts

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California’s Clean Energy Policies

  • Double energy efficiency savings by 2030 (SB 350)
  • Focus utility and CCA energy plans and investments around GHG emission reductions (SB 350)
  • 100% carbon-free electricity by 2045 (SB 100)
      • 50% renewable by 2025
      • 60% renewables by 2030
  • 1,825 MW of energy storage by 2020 (AB 2514/AB 2868)
  • Solar panels required for new homes as of 2020 (CEC)
  • 5 million EVs by 2030 (Gov. Brown Exec. Order)
  • Reduce petroleum use in cars and trucks by up to 50% (Gov. Brown Exec. Order)
  • Building decarbonization (SB 3232)

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California Clean Energy R&D - Invest in the Future

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Electric Program Investment Charge (EPIC) - $130M/year

    • Energy Efficiency & Demand Response
    • Renewable Energy & Adv. Gen.
      • Smart Communities
    • Smart Grid, Storage, DER
    • Environmental
    • Climate Adaptation and Infrastructure Risk Reduction
    • Electric Vehicle Grid Integration
    • Market Facilitation
    • Water-Energy-Food Nexus

Natural Gas R&D - $24M/year

    • Energy Efficiency
    • Renewable Energy & Adv. Gen.
    • Pipeline Safety
    • Environmental
    • Methane Leakage
      • Climate Adaptation and Infrastructure Risk Reduction
    • NG Transportation

Greenhouse Gas Reduction Fund (GGRF) – varies annually, cumulative $9.3B since 2012

    • Greenhouse Gas Emission Reduction
    • Transportation & Sustainable Communities incl. Air Quality
    • Clean Energy & Energy Efficiency incl. Water Eff., Renewable Fuels, and Building Decarbonization
    • Natural Resources & Waste Diversion incl. Fire Prevention
    • Minimum investment requirement in Disadvantaged or Low-Income Communities using CalEnviroscreen methods

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Proposed Climate & Energy �Legislation – 2019 (as of 4/1/19)

  • Wildfires, climate change, PG&E bankruptcy/reorganizations, CPUC oversight
  • California Clean Electricity Authority (SB 56, Garcia)
  • “Ditching Dirty Diesel” (SB 44, Skinner)
  • Nevada, New Mexico considering carbon-free by 2050 goals
  • Utah proposal to let local governments pursue 100% renewable standards

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Topics

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  • What is Policy and Who Makes It?
  • California Climate Policy Goals and Strategies
  • California Clean Energy Policy Goals and Strategies
  • Achievements, Challenges, and Innovation Opportunities
  • Closing Thoughts

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California Advancing Energy Efficiency

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Growth in CA Renewables/RPS

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Renewables grew from �12% to 34%

from 2008 to 2018

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The Falling Cost of Clean Energy �Technologies

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Source: DOE Report, Revolution Now, The Future Arrives for Five Clean Energy Technologies, 2015

Land-Based Wind

Distributed PV

Utility-Scale PV

Modeled Battery Costs

LEDs

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Challenges and Innovation Opportunities

  • Planning, Financing, Building, and Operating a 21st Century Grid (the “Duck Curve”, etc.)
  • Transportation Decarbonization
  • Building Decarbonization
  • Advancing Social Equity

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Challenge #1: A Dramatically Changing Grid

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Facilitating remote isolation and restoration, decreasing outage duration and area of impact

Increasing distribution circuit situational awareness with more near real-time telemetry data points that help identify issues quickly and

accurately

Automating substation control systems which enable remote control of and data acquisition from substation equipment

Supporting grid stability by managing fluctuations of rooftop solar output

High-speed modern radio system, allowing automation switches and sensors to communicate with one another and the substation

Managing future demand on data transmission speed

Supported by grid strengthening for both maintaining reliability and stability

and for increasing the grid’s resilience

Source: P. Pizzaro, SCE, Stanford Energy Seminar, 1/29/18

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Grid Solutions and Innovations

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  • Regional diversity

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  • Fast-ramping natural gas power plants

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  • Time-of-use rate design

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  • Demand response

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  • Electricity storage

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  • Smart inverters

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  • Electric vehicle smart charging

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Innovation Example: Offshore Wind�

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Challenge #2: Transportation Decarbonization

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GHG Emissions: Transportation (including refining) is largest source of CA GHG emissions - ~50%; declined 14% 2007-2011 but has increased since 2013, primarily light-duty vehicles

Air Quality: Severe non-attainment for ozone in San Joaquin Valley and South Coast; cars/trucks emit 80% of NOx, 95% of diesel particulates

CA Strategies: 1) reduce vehicle emissions; 2) increase use of lower carbon fuels (LCFS); 3) reduce VMTs

      • ZEVs: 537,000 cars and trucks; about half of all in the US
      • Chargers: 19,000 public, 1000s of business, 1000s of residential
      • Hydrogen: 39 public hydrogen stations open for business; another ~30 funded

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Transportation Decarbonization

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Challenge # 3: Building Decarbonization

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  • CA buildings account for 25% of GHG emissions
  • Studies show building electrification is a low-cost strategy
    • Electric heat pumps for space conditioning and water heating
    • Role of renewable natural gas in buildings still being analyzed
  • Major challenges exist
    • Costs
    • Market demand/consumer acceptance
    • Trained installers
    • Standards
    • Cost of stranded gas infrastructure
  • 2018 – two key CA laws
    • SB 1477 – CPUC incentive programs (TECH and BUILD)
    • AB 3232 – CEC feasibility study to decarbonize CA buildings to 40% below 1990 levels by 2030

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Challenge # 4: Advancing Social Equity

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  • SB 350 requires improvements in air quality and economic conditions for specific communities using clean energy initiatives

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  • CalEnviroScreen tool evaluates economic, health, and environmental burdens to identify “disadvantaged” communities (DAC)
    • Highest DACs are disproportionately non-White
    • 10th decile alone includes more than 15% of Black and Latino populations statewide
    • Higher percentages of children

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  • Major challenges exist:
    • Access to capital
    • Historical legacies of discriminatory housing practices/split incentive problem for renters
    • Intersectional issues - housing security, food security, public health, and educational outcomes

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Source: Analysis of Race/Ethnicity, Age, and CalEnviroScreen 3.0 Scores, June 2018, California Environmental Protection Agency

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E3’s Deep Decarbonization Update Report (June 2018)�

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  • Evaluates long-term energy scenarios to achieve 40% GHG reduction by 2030 and 80% GHG reductions by 2050 (PATHWAYS model)
  • Focuses on high levels of energy efficiency, renewable energy, electrification of buildings and transportation, zero-carbon fuels
  • Conclusions:
    • Achieving CA’s climate goals will fundamentally transform the state’s energy economy
    • Meeting 2030 goals requires scaling up existing technologies and aggressive market transformation of new technologies not yet at scale (EVs, electric heat pumps)
    • Meeting 2050 goals requires development of at least one new “reach” technology not yet commercially proven
    • Higher carbon prices and business and policy innovations will be essential

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Topics

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  • What is Policy and Who Makes It?
  • California Climate Goals and Strategies
  • California Clean Energy Goals and Strategies
  • Achievements, Challenges, and Innovation Opportunities
  • Closing Thoughts

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Closing Thought #1: What Energy Policies Matter Most for Climate?

  • Energy efficiency – codes and standards -- and building decarbonization
  • RPS requirements, value grid flexibility
  • Markets to lower costs, fund innovation
  • Carbon pricing
  • ZEV mandates, fuel efficiency and emissions standards
  • Policies covering all elements of the energy system and carbon reduction goals, with penalties for non-achievement.

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Closing Thought #2: What Else Matters?

  • Reliability and affordability must be addressed
  • And increasingly, safety (wildfires/flooding/climate change)

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    • How to ensure reliability with increasing number of suppliers, including customers, and technologies?

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    • How to set goals and fund programs that are affordable, especially given the social inequity prevalent in California?

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    • How to balance these policies goals when they conflict?

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    • How to effectively communicate to the public what are California’s policies, why they are needed, and how they will impact the economy and lifestyles.

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Thank You!

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Dian Grueneich

Precourt Energy Scholar, Precourt Institute for Energy, Stanford University

Commissioner Emeritus, CA Public Utilities Commission

Dian.Grueneich@Grueneich.com

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With assistance from Isaac Sevier

isaac@sevier.io

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