Dive Brief:

• The California Public Utilities Commission (CPUC) on Thursday unanimously voted to approve a 46 million metric ton (MMT) greenhouse gas emissions reduction target for the electric sector by 2030 —​ but regulators have also asked utilities and other load-serving entities to simultaneously explore the possibility of further reducing emissions to 38 MMT.
• The agency added the 38 MMT planning requirement to its decision after several stakeholders, including clean energy groups and Southern California Edison, questioned whether the original target was sufficient to achieve California’s decarbonization goals.
• Some parties pushed for an even lower emissions target. But if the electric sector is expected to take on a disproportionately high decarbonization responsibility compared to other industries, "we need to have a conversation about how to socialize those costs more broadly across the economy, instead of solely funneled through electricity customers," CPUC Commissioner Liane Randolph said.

Dive Insight:

The 46 MMT target reflects a 56% decrease in emissions compared to 1990 levels, and requires significant build-out of new capacity; the state is looking to procure 25,000 MW of additional renewables by 2030, including doubling California’s currently installed utility-scale solar capacity and adding 8,900 MW of battery storage —​ about eight times the nation's battery capacity levels in 2018.

However, several stakeholders felt the target didn’t go far enough. In comments filed with the CPUC, Southern California Edison said it has "significant concerns" about reaching the state’s carbon neutrality goals and urged the agency to instead adopt a 38 MMT target. Several renewables and environmental groups, including the Environmental Defense Fund and American Wind Energy Association California, also wrote to Gov. Gavin Newsom, D, contending that the CPUC "is poised to reverse course on state climate policy" and asking instead for a emissions target of 30 MMT.

One of the reasons that the groups opposed a 46 MMT target is because of Senate Bill 100 — California legislation that sets the state on the path to carbon neutrality by 2045 —​ Michael Colvin, director of regulatory and legislative affairs at the Environmental Defense Fund’s California energy program and one of the signatories to the letter, told Utility Dive. The state would be "essentially backloading all the remaining emissions reductions to that last bit of time, from 2030 to 2045.​ You’re essentially taking out the first 10 years of additional runway that you had," he said. 

"Time is the one non-renewable resource that we have —​ why not give ourselves the extra 10 years to help get us where we need to?" Colvin added.

In response to the concerns, the CPUC revised the proposal and now requires load-serving entities to essentially sketch out two portfolios —​ one to meet the 46 MMT target, and another for 38 MMT. Load-serving entities will outline these strategies in their individual integrated resource plans, which are due on Sept. 1. After reviewing the plans, the CPUC will consider lowering the 46 MMT target.

Many parties pushed for a 30 MMT target —​ but cost is another factor to keep in mind, according to Commissioner Randolph. The resource mix to meet the 46 MMT target will cost approximately $45.7 billion annually. The 38 MMT scenario costs $1.1 billion more per year, while reaching 30 MMT would require an additional $2.4 billion annually, she said during the CPUC’s virtual voting meeting Thursday.

The electric sector contributes only 20% of California's greenhouse gas emissions and the commission shouldn’t take on an additional lift without having a more direct statewide conversation about economy-wide goals and strategies for achieving them, she said. And as California moves to electrify the transportation sector and buildings, regulators need to ensure rate structures remain feasible.

Maintaining the balance between clean energy goals and affordability is important, Colvin said —​ but the roughly $1 billion difference between the 46 MMT and 38 MMT scenarios would amount to one or two power plants. And while electrification measures will push up electric bills, ratepayers will simultaneously save on gas bills, he added.

The 38 MMT requirement in the decision is needed to set California on the best path to its 2030 and 2045 decarbonization goals, CPUC Commissioner Clifford Rechtschaffen said during the meeting. "While the cost differential is not nothing… it’s quite small given the scale of the costs that will be entailed in this procurement," he added.

Although Vote Solar recommended the 30 MMT target, "the CPUC decision to continue to evaluate alternatives is a step in the right direction. A final decision on which target is adopted as state policy should occur by the end of the year after the CPUC reviews the alternative local plans," Ed Smeloff, senior director of grid integration at Vote Solar, said in a press release.

While the decision strongly encourages load-serving entities to begin planning procurement in line with the decision, it does not include any near-term binding procurement obligations —​ a source of concern for ratepayer advocacy group The Utility Reform Network (TURN). 

"Our big question and our big critique of the process has been that the commission continues to be ambiguous of the exact way in which load-serving entities are going to have to demonstrate compliance in the near term, with requirements that apply to 2030," Matt Freedman, staff attorney at TURN, told Utility Dive. 

The group is also wary of resource shuffling —​ for instance, where entities meet their targets by purchasing out-of-state large hydro resources, which are later replaced with other forms of generation, like gas. 

"We need to see progress made in the form of additionality, in other words, incremental investments in new zero-emission resources, not just a reshuffling of the existing deck of zero-carbon resources within the Western Interconnect," he said.