September 19, 2019 – A diverse group of labor, utility, equity, consumer, and environmental organizations are identifying an urgent need – California must require natural (a.k.a. “fossil”) gas transition planning to protect workers and communities as the state strives to reach its climate and public health goals. A report released today by Gridworks, the product of an intensive stakeholder process of which NRDC was a part, recognizes that fossil gas use will decrease dramatically under a range of scenarios and offers key principles and a set of actions needed to manage this transition safely and equitably.
As NRDC has said before, the climate crisis requires that we reduce the use of gas. This has again been confirmed in the California Energy Commission (CEC) funded study by Energy+Environmental Economics (E3) and University of California Irvine (UCI), which projects a sharp decrease in statewide gas demand ranging from roughly 30 percent in a “no building electrification” scenario, to a 60 percent decrease in a “high building electrification” scenario where heating and hot water switches from gas to electricity. Meanwhile, gas utilities are investing massively in upgrading and replacing aging gas infrastructure following the San Bruno explosion in 2010 and Aliso Canyon gas leak in 2015.
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The reduction in gas use combined with the eye-popping expense of maintaining gas infrastructure creates a direct threat to the economics of gas in California – the increasing infrastructure costs will need to be recovered from declining gas sales. Customers could face skyrocketing gas prices, and unmanaged customer defection from the gas system could destabilize gas utilities and threaten gas-dependent industries and the livelihoods of gas workers. As the report identifies: “There are two paths available to California: a smart, managed path that maximizes benefits and minimizes costs for everyone, or an uncontrolled path that is reactive and costly.”
The labor, utility, equity, consumer, and environmental stakeholders brought together by Gridworks used E3’s analysis as a starting place and asked what is needed to ensure a safe and equitable transition in line with 2050 climate scenarios. Three priorities became immediately clear: 1) we must protect gas workers, 2) we must ensure affordability for vulnerable Californians, and 3) we must manage this transition, starting with a gas planning process for California.
As identified in the report, California leaders must anticipate and organize a just transition for the gas delivery system workforce. This is both fair to workers and vital to maintain the safety of the gas system. While the gas system is not going away tomorrow (and we very likely we will still have some gas infrastructure in 2050), anticipating changes in gas demand to avoid shocks to workers should be a priority. Some of the components that should be planned for to support workers include:
- Bridge or buyout retirement programs;
- Cross training and retraining opportunities with wage protection; and
- Severance packages with extensions available to those willing to stay and or move to a different geography in the system.
Ensuring Affordability and Empowering Low-income Communities
It is equally important for California leaders to develop a comprehensive strategy to ensure low-income and disadvantaged communities are empowered through, benefit from, and are not left behind in the transition. Many California households are already living on the edge financially. In 2017 over 800,000 households had their electricity or gas service shut off by the investor-owned utilities, impacting 2.5 million people, many of whom were children. Some of the components to protect vulnerable Californians should include:
- Meaningful engagement with and involvement of low-income and disadvantaged communities throughout the gas transition;
- Bill protections for all low-income customers;
- A one-stop shop to provide direct support to low-income customers for building upgrades including energy efficiency, weatherization, and electric technologies; and
- Ensuring protections for renters to prevent displacement.
Stop Digging the Hole – and Plan Now to Smooth the Path to 2050
The Gridworks report provides a detailed set of principles, policies, and financial tools to safely manage changes to the gas delivery system. But two key messages stand out loud and clear. First, we must stop “digging the hole” we are in and avoid new expansions of the gas system. All subsidies and support must end for new gas infrastructure that will become a stranded (unused) asset before the end of its life, a liability to gas utilities and customers left on the system.
Second, the state must initiate integrated long-term planning for gas demand, infrastructure, and the transition of the delivery system. We have the time needed to do this planning if we start now. This will allow California leaders, regulators, utilities and stakeholders to identify ways to reduce costs for all Californians and chart a path for the gas delivery system that aligns with the State’s climate and air quality goals. As an example of the type of savings that might be possible, just last week the Public Utilities Commission approved PG&E’s proposal to shutter two gas storage facilities (Decision 19-09-025), which is estimated to save $1 billion over the next 20 years while maintaining reliability. In this case, PG&E identified these savings independently and came to the Commission for approval, but more systematic planning across California’s gas delivery system is needed to identify opportunities like this for cost savings and scaling back gas infrastructure.
It is clear that we urgently need a gas transition strategy to shield Californians from sharply higher heating bills and to protect workers who’ve dedicated their careers to maintaining a safe gas system. With strong leadership, partnership and determination from all stakeholders, we can meet the state’s climate targets while undertaking an equitable transition.
Merrian Borgeson is Senior Scientist, Climate & Clean Energy Program, NRDC