Can California Energy Policy Move Past its Contradictions?

California’s Plan for Climate Action

California has set ambitious climate goals aimed at significantly reducing its environmental impact. The state has committed to achieving carbon neutrality by 2045, meaning it plans to offset as much carbon dioxide as it emits through a combination of reductions and carbon capture initiatives. A cornerstone of its strategy is the legal mandate to transition to 100% renewable energy sources for electricity by 2045, encompassing substantial investments in solar, wind, and other renewable technologies. Additionally, California aims to reduce greenhouse gas emissions to 40% below 1990 levels by 2030. In the transportation sector, the state has set forth clean car mandates with a goal to phase out the sale of new gasoline-powered vehicles by 2035. There is also a strong focus on enhancing energy efficiency across buildings and industrial operations and on waste reduction measures aimed at decreasing methane emissions from landfills.

Following Governor Newsom’s call for more ambitious climate action, state’s climate plan would create 4 million new jobs, slash greenhouse gas emissions by 85%, and cut oil usage by 94%. Source: California Governor Gavin Newsom

However, California’s energy strategy presents inherent contradictions that complicate the state’s path toward these goals. While the state pushes forward with renewable energy initiatives and stringent emissions standards, it simultaneously maintains its reliance on fossil fuels through continued oil and gas production. This tension is evident in specific actions taken by the state, each reflecting a complex interplay of environmental concerns, economic factors, and political pressures. 

This article will examine this contradiction, exploring how California’s pioneering environmental policies coexist, often uneasily, with practices that perpetuate fossil fuel reliance. We will look at several key developments that exemplify this struggle: the managed phase-down of the environmentally problematic Aliso Canyon natural gas storage facility; the implementation of Carbon Capture and Storage (CCS) projects in Kern County, a strategy that raises questions about the feasibility of “clean” oil production; the statewide fracking ban, enacted in October 2024 as a step towards eliminating harmful extraction methods; and finally, the enduring question of California’s ongoing oil production.

Natural Gas Storage at Aliso Canyon

Located near the city of Los Angeles, the Aliso Canyon Natural Gas Storage Facility, one of the largest of its kind in the United States, has become a focal point in California’s complex relationship with fossil fuels. The facility gained notoriety after a major leak in 2015, which released approximately 109,000 metric tons of methane into the atmosphere over a period of nearly four months. This leak was the largest known methane leak in U.S. history and had a significant climate impact, equivalent to the greenhouse gas emissions of about half a million cars per year.

The Aliso Canyon leak ignited a fierce push from community groups and environmental advocates for the permanent closure of the facility who argued that such a massive underground natural gas storage operation constituted an unacceptable threat to public health and the environment, especially in a densely populated area. This incident catalyzed significant changes to regulations surrounding energy infrastructure, including increased scrutiny and ongoing efforts to phase out the facility. Nearly a decade after the Aliso Canyon leak, in December 2024, the California Public Utilities Commission (CPUC) cautiously moved forward with a plan that could eventually lead to the facility’s shutdown. However, the roadmap laid out by the CPUC is conditional and depends on a series of economic and energy demand assessments that will determine whether the facility can be phased out without disrupting the region’s energy supply.

The debate surrounding Aliso Canyon exemplifies a core tension in California’s broader energy strategy. While the state promotes aggressive measures such as a statewide ban on fracking and investments in renewable energy, it simultaneously grapples with its continued reliance on established fossil fuel infrastructure. The decision to keep Aliso Canyon operational, even conditionally, is emblematic of the state’s difficulty in disentangling itself from existing fossil fuel assets, despite its goals for environmental leadership.

Statewide Ban on Fracking

The Aliso Canyon situation reflects a similar tension visible in California’s approach to hydraulic fracturing. In 2021, Governor Gavin Newsom announced his intention to ban fracking. The ban on hydraulic fracturing, a policy aimed at curtailing the controversial practice of “fracking,” officially took effect in January 2024, marking a significant milestone in the state’s environmental policy. The ban specifically prohibits the issuance of new permits for hydraulic fracturing, which involves injecting high-pressure fluids into subsurface rock formations to release oil and gas. This move was largely celebrated by environmental advocates who have long raised concerns about the method’s potential for groundwater contamination, induced earthquakes, and air pollution. 

However, according to Kyle Ferrar, the Western Program Director at FracTracker Alliance, the ban’s formal enactment may not represent a dramatic shift in permitting practices. Speaking with Capital Public Radio in July 2024, Ferrar notes that as the state had already been rejecting new fracking permit applications for roughly two years prior to its official implementation, citing an “unjustifiable exposure risks and impacts to the climate from greenhouse gasses, as well as [on] local communities.” These earlier permit rejections suggest a policy shift well before the formal ban was put in place.

While the ban prohibits new fracking permits, it does not impact other methods of oil and gas extraction, such as conventional drilling, steam injection, or other enhanced oil recovery techniques. The ban is a targeted step toward reducing reliance on one specific, particularly harmful extraction method, but it is not a complete overhaul of California’s oil and gas production. Furthermore, according to a 2019 industry-commissioned report, which used public data from CalGEM and private industry surveys, hydraulic fracturing accounted for a relatively small portion of the state’s overall production—approximately 17 percent, or 26.5 million barrels that year. This figure suggests that while fracking is a concerning practice that warrants regulation, the majority of oil production in California relies on other techniques, which may require further scrutiny and regulation to achieve broader sustainability goals.

Oil Majors Invest in Carbon Capture and Storage

Oil Production in California

Despite its commitment to reducing carbon emissions, California remains a significant oil producer, typically ranking seventh or eighth in U.S. crude oil production. However, the state’s extensive oil fields, particularly in regions like Kern County, are facing growing economic hurdles. While they continue to pump thousands of barrels of oil daily, the ease of extraction is diminishing as these fields are increasingly depleted. This means oil companies are having to utilize increasingly expensive methods, such as steam injection, to recover remaining resources, raising concerns about the long-term economic viability of these operations.

Furthermore, in 2024, the California Geologic Energy Management Division (CalGEM) approved 84 drilling permits for reworks, deepenings, and sidetracks of existing wells. These actions suggest a push to extract more oil from existing wells using more intensive and costly methods, further highlighting the diminishing returns and rising costs of oil production in California. Kyle Ferrar, FracTracker Western Program Director, noted the cost pressures on the state’s oil industry.

“As it stands, California’s oil reserves have been largely drained, methods such as steam injection to extract the remaining oil are increasingly expensive, and instituting public health protections also makes it more expensive to produce oil,” Ferrar said in response to a 2024 Los Angeles Times article on Chevron’s plan to relocate operations outside of California.

California’s Energy Contradictions

California’s current regulatory approach, fragmented across multiple agencies with distinct priorities such as the California Public Utilities Commission (CPUC), the California Energy Commission (CEC), and the California Air Resources Board (CARB), overlooks the broader spectrum of activities that contribute to environmental degradation and public health risks. This piecemeal approach, where individual agencies focus on specific sectors or issues, often results in inconsistencies and a lack of coordination across oil, natural gas, and emergent technologies like Carbon Capture and Storage (CCS).

To address these contradictions, California needs a cohesive energy strategy that encompasses the entire infrastructure of energy production, rather than addressing isolated elements in a siloed manner. This would ensure that shifts towards newer technologies like CCS do not merely repackage existing risks but actively work towards their genuine elimination. A unified strategy is crucial to prevent a scenario where one agency approves a project with questionable environmental impacts while another works to mitigate the damage. As the state continues to set precedents in environmental policy, it faces the task of reconciling its innovative initiatives with the realities of its complex and fragmented energy practices. Only then can California truly achieve its stated goals of sustainability and reduced carbon dependence.

The fate of initiatives like the Carbon TerraVault and the future of companies like California Resources Corporation (CRC) will be telling in whether the state can truly detach from its fossil-fueled past to embrace a cleaner, sustainable future, or if the fragmented approach will undermine its climate goals. The state’s success will depend on its ability to bring coherence to its existing system. As stakeholders watch closely, California’s energy strategy remains a critical area of interest, reflecting the ongoing national debate over the future of energy in the United States.