Ringside: Can Energy and Water Interests Find a Common Agenda?

It’s a risk to promote an agenda that calls for practical water projects, and at the same time, calls for practical energy projects. To begin with, the word “practical,” in both cases, is a matter of bitter debate. Equally challenging is the fact that even within each of these communities, water, and energy, there is no common agenda. How can they join forces if they don’t even have internal cohesion?

Then there is the controversy. Why should a water agency or a farm bureau identify with an energy agenda that invites even more opposition than they’re already enduring for their own goals? In particular, why would a farmer want to be part of a coalition, or endorse a campaign platform, that calls for preservation of California’s oil and gas industry?

To answer this, let’s define “practical” as any investment that will lower the cost of doing business. According to that criteria, California’s state policies to-date have not been practical, because we endure the highest prices for gasoline and electricity in the continental United States. CARB/LCFS compliance, taxes, and regulatory fees add nearly $2.00 to the price per gallon of gasoline in California. Inordinate restrictions and mandates are also the reason the retail price of electricity in California is roughly twice what it costs elsewhere in the U.S.

Petroleum products in general, gasoline, diesel fuel, petroleum-derived fertilizers, chemicals, and plastics, account for a high percentage of costs for farmers. Some estimates put these costs at 20 percent of total farming expenses. From what I’ve heard from farmers, that number may be on the low side, and whatever percentage may be most accurate, it has risen substantially in the last five years.

There’s another reason farmers may want to help California’s oil and gas industry to survive. In many cases they occupy the same regions in the state. And if the farming sector in California contends with state policy decisions that could eliminate 25 percent of the acreage and jobs – much more than that in some areas – the oil and gas sector are facing complete annihilation. A cascading failure of this industry has never been more plausible. If we end up importing most of our refined gasoline and diesel fuel, not only will those prices rise, but entire regions – which happen to also be farming regions – that supported in-state drilling and refining companies will be devastated economically.

Is this practical? California still derives 44 percent of its total energy from petroleum and another 32 percent from natural gas. Meanwhile, we import 77 percent of our crude oil and nearly 90 percent of our natural gas. Most people agree that the role of nonrenewable combustibles is going to slowly diminish. But why not preserve our own capacity to produce it, when California is sitting on abundant reserves and could sustain a thriving oil and gas industry throughout a transition that is certain to take the next several decades? Is it unreasonable to make this suggestion?

In politics, the more things you are for, the more people you alienate. The bigger the coalition that you aspire to build, the harder it will be to hold together. It isn’t as if the energy industry in California has itself united behind a policy agenda. They are inherently in conflict. Wind and solar farms displace natural gas generating plants. California’s natural gas utilities only operate at 26 percent uptime these days, only reaching full output when there’s no sun or wind. Instead of investing in ultra efficient, ultra clean retrofits in order to resume their role as baseload power plants with 90 percent uptime, they have accepted managed decline.

Conflict is everywhere. Neither the renewables or the natural gas folks want to go out of their way to help nuclear power to succeed, since its baseload output could displace them both. And oil, vilified but still the giant in the room, strives to remind us all of its lingering indispensability.

There are numerous examples of the nexus between water, farming, and energy. Consider that with 400 feet of drop between Millerton Lake and the proposed Temperance Flat Reservoir, a megawatt-hour of electricity could be generated for every two acre-feet of water passed through the turbines. At the San Luis Reservoir, where reversible pumps have put this into repetitive practice using 300 feet of drop, it takes just under three acre-feet to produce a megawatt-hour. Every sunny mid-day, its operators buy electricity for next to nothing to pump water from the O’Neil Forebay up into the big off-stream tub – San Luis holds half a cubic mile of water when full. Then at night they pour it back through pumps flipped into turbine mode during peak demand, sending over 400 megawatts into the grid.

Examples of the water/energy nexus abound. It would only take 3,500 gigawatt-hours to power seawater desalination plants with the capacity to produce one million acre feet of fresh water. That’s barely one percent of the state’s total annual electricity consumption. These innovations, combined with practical policy revisions and project choices, could enable California’s water consumers to negotiate a grand bargain and common agenda, one that could unite disparate interests from the Central Valley and Imperial Valley to the great coastal cities. Some of those ideas will be the topic of next week’s newsletter.

In the meantime, farmers and water agencies should not forget the energy industries that, side by side with farmers, built this state and ensures its vitality to this day. And while a shared agenda may be elusive, the guiding principle is in plain sight: authentic abundance. Affordable energy and water will become reality when purveyors of the most cost-effective solutions unite, demanding reasonable regulatory relief, and accepting massive, unsubsidized competition.