BLM California manages nearly 600 producing oil and gas leases covering more than 200,000 acres and 7,900 usable wells. More: Between 80% and 90% of all surface-disturbing activities related to oil and gas activities occur in the San Joaquin Valley on public lands administered by Central California District, Bakersfield Field Office. More than 95% of all Federal drilling occurs in established fields within the Kern County area of the San Joaquin Valley.
The oil and gas program in California is one of the more active in all of the western states, with 2013 onshore oil production figures ranking the State as the 3rd most productive state in the United States. In 2012, California was ranked as the 13th most productive natural gas-producing state. BLM California is responsible for managing one of the most productive individual onshore leases in the lower 48 states, and four of the nation’s top seven producing oil fields are located in Kern County. As a general rule, California’s Federal production totals average approximately 8%-10% of California’s total oil and natural gas production. Original public domain image from Flickr
On October 7, California took a bold step in combatting climate change. Governor Gavin Newsom signed two pioneering bills, SB-253 and SB-261, that not only bolster greenhouse gas (GHG) emissions reporting but also mandate prominent companies to unveil their climate-related financial risks. What makes this move especially notable is its scope; even exceeding the requirements set by the U.S. Securities and Exchange Commission in 2022.
What Does SB-253 Entail?
Companies with annual revenues surpassing $1 billion in California will now be obligated to disclose their GHG emissions each year. By 2026, both direct and indirect emissions fall under this mandate. And come 2027, the requirements will be even more stringent. However, there’s a bit of leniency; companies that report scope 3 emissions, which are notoriously challenging to quantify, will face milder penalties provided they report in a genuine effort. The stakes are high; failure to comply can result in fines of up to $500,000 per year. However, to keep things in perspective, $500,000 is a mere 0.0083% of Chevron’s net income of $6.01B.
The Significance of SB-261
Marking a debut at the state level, SB-261 makes it compulsory for businesses with yearly earnings exceeding $500 million to publicly disclose their climate-related financial threats and preventive measures. This requirement kicks off on January 1, 2026, with non-compliance potentially costing companies up to $50,000 annually.
Who’s in Charge?
The responsibility of implementing these groundbreaking laws rests with the California Air Resources Board (CARB). They’re set to engage in rule-making processes in 2024 and will actively seek input from concerned stakeholders. Yet, the path might not be smooth; legal challenges are anticipated, suggesting that the future of these laws may be determined in court.
The Implications for Big Players
Corporate giants in California, such as Chevron and Apple, now find themselves under the spotlight. They need to account for broader emission sources, which include aspects like supply chains and product usage. And with these rigorous Californian regulations, the state is setting a precedent, outpacing both federal and state norms. Furthermore, global powerhouses like Apple and Microsoft are gearing up for these disclosures. While California stands strong with its firm economic position, its guidelines prove more demanding than those at the U.S. federal level.
The Bigger Picture
While reporting scope 3 emissions might be complex, it underscores vital areas of transformation. When companies consistently and transparently disclose their emissions, it can catalyze real climate action. As a testament to this, the U.K.’s emission disclosure rule led to a noteworthy 8% reduction in corporate emissions.
Fayette Power Project, a coal power plant near La Grange Texas, outside of Austin, in winter 2019. Fayette has been blamed for numerous pollution problems, and was one of the ERCOT plants that suffered failures due to cold weather in winter 2021. Photo by Sam LaRussa on Unsplash.
Regional transmission organizations offer consumer savings but come with some loss of local control
A report prepared for the South Carolina state legislature and released late last month determined that a range of electric market and transmission reforms — including creating a new independent organization to run the electric grid or joining an existing one — would bring “substantial benefits” for customers, potentially as much as $362 million a year.
The report by the Brattle Group, a Boston consulting firm, stems from the V.C. Summer nuclear plant fiasco that saddled the state’s ratepayers with billions in cost overruns for reactors that were never built.
And it’s the latest chapter in a long-running saga over a southern-fried electric grid anomaly.
The majority of U.S. electric customers live in areas managed by regional transmission organizations, which coordinate the flow of electricity, ensure reliability, plan transmission projects and run electric markets. In large parts of the West, consumers benefit from a separate market that helps move low cost electricity around and manages congestion on transmission lines. Colorado is not part of a regional transmission organizations, though it’s taking small steps toward being so. But most of the Southeast remains dominated by a handful of large utility companies that have successfully thrown back attempts to bring them under any kind of similar arrangement.
“Basically, utilities have a lot of political power in the Southeast,” said Rob Gramlich, president of Grid Strategies, a consulting firm focused on integrating clean power into the grid. “It’s not like utilities didn’t have power in the Northeast or Midwest or California, but there was a strong movement 20 years ago to get to a more efficient type of market and utilities in the Southeast resisted any such efforts in their region.”
‘Unfettered control’
The South Carolina report, which got a lukewarm reception from lawmakers there, per the Charlotte Business Journal, comes as big employers like Google looking to meet corporate sustainability goals express frustration with the lack of market options in the Southeast and environmental groups, eager to speed up the renewable transition, push for a true wholesale market in the region.
“Utilities in the Southeast have pretty much unfettered control over which generation they use and they’re not subject to any meaningful competition,” said Nick Guidi, an attorney with the Southern Environmental Law Center. Guidi and other market proponents say bringing the Southeast into a regional transmission organization or other type of competitive market construct would bring down wholesale electric costs for consumers, improve reliability in the face of increasing severe weather and help get more cheap renewable power onto the grid.
However, utility companies and other opponents argue that regional transmission organizations and regional power markets add undue layers of complexity, reduce state oversight and take away control over utilities’ own operations. They also say state energy policy goals would take a backseat.
“We do not believe changing our integrated utility model is best for our customers and communities in North Carolina and South Carolina,” said Jeff Brooks, a spokesman for Duke Energy, which is headquartered in North Carolina and operates in both RTO and non-RTO areas.
“The report overstates savings and doesn’t account for administrative and joining costs. Participation in an RTO would keep our coal plants running much longer than currently planned and would transfer critical aspects of our operations into the hands of a federally-run body which is not accountable to the citizens, regulators and elected officials of the states we serve.”
Utilities in the Southeast have pretty much unfettered control over which generation they use and they’re not subject to any meaningful competition.
– Nick Guidi, of the Southern Environmental Law Center
Southern Company, which operates the dominant utilities in Georgia and Alabama as well as the smaller Mississippi Power, did not respond to a list of questions about a potential Southeastern wholesale electric market or regional transmission organization. But CEO Thomas Fanning told The New York Times last year that “we absolutely are superior in every regard to those markets over time.”
The South Carolina report estimates that the biggest benefits for the state’s electric customers would come from integrating with PJM, though that would also require its neighbor North Carolina to do so. A bill filed in the North Carolina General Assembly would put $500,000 forward for a study similar to the one South Carolina just performed, citing the rolling blackouts from Elliott as a reason. A 2019 North Carolina white paper, also by Brattle, commissioned by consumer advocacy and clean energy business groups, has estimated that an RTO-operated market could yield hundreds of millions of dollars a year in benefits for electric customers there.
‘Still better for consumers’
Generally, in a wholesale electric market, power plants compete to provide electricity to the grid. The cheapest generators run more, replacing output from more expensive plants and creating savings for consumers. That also allows utilities to buy power from the market when it’s less expensive than producing it themselves. Regional transmission organizations plan electric transmission projects on a regional basis, which can avoid redundant projects by neighboring utilities, as the Brattle group noted in the 2019 paper.
Gramlich said regional transmission organizations and the power markets they run also enable large, seamless transfers of power to improve efficiency during regular operations and keep the lights on when the grid is under stress, such as during Winter Storm Elliott, when Duke Energy was forced to implement rolling blackouts in the Carolinas. The Tennessee Valley Authority, which also operates outside of an RTO, did the same during the storm.
Though PJM, which runs the electric grid for neighboring Virginia, along with a small portion of North Carolina, and parts or all of 11 other states and the District of Columbia, also saw power plants hamstrung by the frigid weather, it avoided blackouts.
“It’s not in the utilities’ nature to give up control of some of the operations and planning,” Gramlich said. “Even with some of the warts on RTOs, it’s still better for consumers than just having a vertically integrated franchise monopoly that does everything.”
There are indeed tradeoffs involved in being part of a regional electric grid, said Kent Chandler, chairman of the Public Service Commission in Kentucky, which is part of two different RTOs — PJM and the Midcontinent Independent System Operator (MISO) — and also includes territory that isn’t in one.
“Outside of Texas we’re really the most unique state in terms of markets,” he said.
Being part of an RTO, he added, does mean giving up a “certain amount of control,” though he noted that varies considerably depending on how the organizations are set up.
“States are really on the outside looking in in PJM,” Chandler said, though he added that in other RTOs, notably MISO and Southwest Power Pool, “that is not the case.”
And while he’s not advocating for or against a new market or RTO in the Southeast, he thinks the pros outweigh the cons for Kentucky.
“Whatever shortcomings MISO or PJM have in terms of governance or transmission planning or whatever they are … they’re still better than not having the RTO,” he said. “I think the increase in reliability and the reduction in cost for market membership is better than not having them.”
Nevertheless, RTOs and power markets also add what can be immense levels of complexity and other headaches, like the long interconnection queues — essentially wait lists to connect to the grid that are holding up mostly new wind and solar projects — that have bedeviled MISO and PJM.
“RTOs are a 1990s idea that has yet to adapt to the clean energy era. The Brattle Study ignored the problems RTOs have encountered since being first rolled out by FERC 25 years ago,” the South Carolina AARP wrote in comments on the Brattle report. “RTOs are cumbersome, complicated, and expensive entities to deal with.“
Why it matters
The electric grid, utility regulation and electric markets are complicated. But everyone pays an electric bill, and the regimes that govern the power system all make a difference in the cost and the source of the electricity that gets delivered to homes and businesses.
The Western Energy Imbalance Market says it’s delivered $3.4 billion in “gross benefits” (defined as cost savings, integration of renewables and “improved operational efficiencies” such as the reduction in the need for reserve power ) since 2014. Southwest Power Pool says its markets provide more than $744 million a year in net savings for participants. Entergy, a company that operates utilities in Arkansas, Louisiana, Mississippi and Texas and joined MISO amid prodding from the U.S. Department of Justice’s Antitrust Division, said Louisiana customers saved $120 million in the first year of membership. PJM, the nation’s largest RTO serving some 65 million people, says its regional grid and market operations create anywhere from $3.2 billion to $4 billion in savings a year.
That’s big money, proponents of markets and RTOs say, and it could deliver real value for electric customers in the Southeast, who have some of the highest energy burdens (the proportion of household income required to pay energy bills) and bills in the nation.
One analysis by RMI, a nonprofit focused on decarbonization, posited that Southern Company, which has been under fire for climbing bills in Alabama and Georgia, says the utility giant could have saved its customers $1.5 billion between 2015 and 2020 if it was in a wholesale market that required “economic dispatch” of its coal plants, meaning operating them in order from lowest cost to highest and importing cheaper electricity from elsewhere.
“Millions of Southerners struggle to pay their monthly electric and gas bills. More customers are cost-burdened in the South than in any other part of the country, and more than a third of the region’s population has trouble paying their energy bills,” the Southeast Energy Efficiency Alliance, an Atlanta nonprofit, wrote in a report released last month. “Low-income households and people of color pay a higher financial and health price to power their homes than everyone else.”
Eric Gimon, a senior fellow at Energy Innovation, a nonpartisan energy and climate policy think tank, worked on a 2020 report that found a “fully competitive” Southeast wholesale electric market would generate $384 billion in regional savings, create 285,000 clean energy jobs and cut carbon emissions from the electric sector by 37 percent by 2040.
He said their study found that the biggest savings came when power plants were put under competitive pressure, adding that electric utilities or their parent companies often have an equity stake in the gas pipelines that feed their power plants and aren’t incentivized to change the generation mix for lower cost options like solar and battery storage.
“People in the Southeast are paying a lot more for energy than they need to in order to keep the status quo that profits the shareholders and investors in these large utilities,” Gimon said.
Remaining to be SEEM
Last year, a new market of sorts did launch for the Southeast. Called the Southeast Energy Exchange Market and founded by a group of regional utilities, the platform is intended to facilitate voluntary power trades between utilities.
“The SEEM platform will help save customers money and better integrate renewable resources, while ensuring all customers across the region realize the promise of renewables,” said Noel Black, Southern Company’s senior vice president of governmental affairs, when the market launched.
But critics, including Guidi and Gramlich, say as currently constructed the Southeast Energy Exchange Market is woefully inadequate. Several environmental groups and other organizations are suing the Federal Energy Regulatory Commission over the market, arguing it flies in the face of allowing open access to transmission.
Guidi said the market “completely failed” during Winter Storm Elliott, when power exchanges were most needed, and has seen its trade volume decrease since it launched in November.
“It’s only been around for four months but you would hope to see some upward trend in trade volume,” Guidi said.
The market also lacks crucial aspects: independent governance, transparency and competition, among other shortcomings, they said. A Google attorney called the market a “nothing burger” at an energy conference in Atlanta last year.
“SEEM could be built into something real,” Gramlich said. “As it stands it’s just kind of nickels and dimes. It’s not really of any significance.”
‘This year we see yet another rise in global fossil CO2 emissions, when we need a rapid decline.’
By Brendan Montague, The Ecologist (Creative Commons 4.0)
Global carbon emissions in 2022 remain at record levels – with no sign of the decrease that is urgently needed to limit warming to 1.5°C, according to the Global Carbon Project science team.
If current emissions levels persist, there is now a 50% chance that global warming of 1.5°C will be exceeded in nine years.
The new report projects total global CO2 emissions of 40.6 billion tonnes (GtCO2) in 2022. This is fuelled by fossil CO2 emissions which are projected to rise 1.0% compared to 2021, reaching 36.6 GtCO2 – slightly above the 2019 pre-COVID-19 levels. Emissions from land-use change, such as deforestation, are projected to be 3.9 GtCO2 in 2022.
Global Carbon Budget 2022 — Schematic representation of the overall perturbation of the global carbon cycle caused by anthropogenic activities averaged globally for the decade 2012–2021. See legends for the corresponding arrows and units. The uncertainty in the atmospheric CO2 growth rate is very small (±0.02 GtC yr−1) and is neglected for the figure. The anthropogenic perturbation occurs on top of an active carbon cycle, with fluxes and stocks represented in the background and taken from Canadell et al. (2021) for all numbers, except for the carbon stocks in coasts, which are from a literature review of coastal marine sediments (Price and Warren, 2016). (Creative Commons Attribution 4.0 License)
Atmospheric
Projected emissions from coal and oil are above their 2021 levels, with oil being the largest contributor to total emissions growth. The growth in oil emissions can be largely explained by the delayed rebound of international aviation following COVID-19 pandemic restrictions.
The 2022 picture among major emitters is mixed: emissions are projected to fall in China (0.9%) and the EU (0.8%), and increase in the USA (1.5%) and India (6%), with a 1.7% rise in the rest of the world combined.
The remaining carbon budget for a 50% likelihood to limit global warming to 1.5°C has reduced to 380 GtCO2 (exceeded after nine years if emissions remain at 2022 levels) and 1230 GtCO2 to limit to 2°C (30 years at 2022 emissions levels).
To reach zero CO2 emissions by 2050 would now require a decrease of about 1.4 GtCO2 each year, comparable to the observed fall in 2020 emissions resulting from COVID-19 lockdowns, highlighting the scale of the action required.
Land and ocean, which absorb and store carbon, continue to take up around half of the CO2 emissions. The ocean and land CO2 sinks are still increasing in response to the atmospheric CO2 increase, although climate change reduced this growth by an estimated 4% (ocean sink) and 17% (land sink) over the 2012-2021 decade.
Meaningful
This year’s carbon budget shows that the long-term rate of increasing fossil emissions has slowed. The average rise peaked at +3% per year during the 2000s, while growth in the last decade has been about +0.5% per year.
The research team – including the University of Exeter, the University of East Anglia (UEA), CICERO and Ludwig-Maximilian-University Munich – welcomed this slow-down, but said it was “far from the emissions decrease we need”.
The findings come as world leaders meet at COP27 in Egypt to discuss the climate crisis.
We are at a turning point and must not allow world events to distract us from the urgent and sustained need to cut our emissions.
—Professor Corinne Le Quéré, Royal Society Research Professor at UEA’s School of Environmental Sciences
“There are some positive signs, but leaders meeting at COP27 will have to take meaningful action if we are to have any chance of limiting global warming close to 1.5°C. The Global Carbon Budget numbers monitor the progress on climate action and right now we are not seeing the action required.”
“If governments respond by turbocharging clean energy investments and planting, not cutting, trees, global emissions could rapidly start to fall.
“We are at a turning point and must not allow world events to distract us from the urgent and sustained need to cut our emissions to stabilise the global climate and reduce cascading risks.”
Land-use changes, especially deforestation, are a significant source of CO2 emissions (about a tenth of the amount from fossil emissions). Indonesia, Brazil and the Democratic Republic of the Congo contribute 58% of global land-use change emissions.
Transparent
Carbon removal via reforestation or new forests counterbalances half of the deforestation emissions, and the researchers say that stopping deforestation and increasing efforts to restore and expand forests constitutes a large opportunity to reduce emissions and increase removals in forests.
The Global Carbon Budget report projects that atmospheric CO2 concentrations will reach an average of 417.2 parts per million in 2022, more than 50% above pre-industrial levels.
The projection of 40.6 GtCO2 total emissions in 2022 is close to the 40.9 GtCO2 in 2019, which is the highest annual total ever.
The Global Carbon Budget report, produced by an international team of more than 100 scientists, examines both carbon sources and sinks. It provides an annual, peer-reviewed update, building on established methodologies in a fully transparent manner.
