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IN THIS ISSUE – “Innovative Proposals” or “Chicanery”?
FINAL MONTH OF CAPITOL BUSINESS
- Houses Divided: State Senate & Assembly Kerfuffle as Final Month Opens for 2020
- Legislative Dem Leaders Roll Out $100-Billion Economic Stimulus Package
- Dems’ Stimulus Criticized for “Scant Details” & “Chicanery”
- You Can’t Judge a Ballot Initiative by Its Title
WATER & AIR & POWER
- “Water is the Lifeblood of Our State”: Newsom’s New Guidance Starts Debate Deluge
- Cap & Trade Funding Slashed for CalEPA, Other Agencies; More COVID Cuts Anticipated
- Pandemic Plummets Power Consumption
FOR THE WEEK ENDING JULY 31, 2020
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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Frustration between the California Assembly and Senate flared as lawmakers returned to the Capitol this week — including the cancellation of Tuesday hearings in the lower house, which underscored the enduring challenges of making policy during a pandemic.
The Legislature reconvened a final five-week frenzy of legislating ahead of an Aug. 31 deadline. Lawmakers are jamming under a compressed timeline: Coronavirus outbreaks have repeatedly compelled leaders to call extended recesses, shaving off invaluable opportunities for votes, hearings and deal-making.
They have been forced to cut down the number of bills they’re carrying, with committee chairs conveying that they will hear fewer bills and leaders urging members to focus on measures related to the pandemic. Those circumstances are spurring interhouse tension, which was immediately evident on Monday at the first committee hearing since the Legislature adjourned weeks earlier.
Frustrated Assembly members said at an Assembly Revenue and Taxation Committee hearing that they did not understand the Senate’s criteria for which bills can advance and accused their counterparts of mismanaging the situation.
Assemblymember Adam Gray (D-Merced) issued a stunning blanket refusal to vote for any Senate bills “until we can get some rational agreement with our colleagues on how to move forward during this public health crisis,” faulting the Senate for “real mixed messages” around “how we’re prioritizing legislation during a public health crisis that’s unprecedented.”
“The Senate is failing us and failing the state of California,” said Assemblymember Marc Levine (D-Greenbrae).
Substantially more Assembly bills are currently active than Senate measures, which is in part a reflection of having twice as many members — but not entirely. Given that there are more than three times as many Assembly proposals still in play, some senators have been led to believe they made more sacrifices to curtail their bill portfolios than did their Assembly counterparts.
Bills that passed the Assembly floor are now awaiting votes in the Senate, and vice versa, which increases the chances that lawmakers feel the other house is mishandling their work.
In a high-level acknowledgment of the disconnect between houses, Assembly Speaker Anthony Rendon wrote his caucus later Monday that hearings scheduled for Tuesday would be canceled to address a concerning “imbalance of bills yet to be considered in each house.”
“We have important work in front of us and I am confident that we will come together to work on behalf of the people of California,” Rendon wrote.
Sen. Ben Allen (D-Santa Monica) acknowledged in an interview that “limited bill options” were raising “tensions between the houses,” noting that the Senate was “struggling to deal with its calendar” in a shortened window.
“Not all these bills are going to get heard, and I think that leads to frustration,” Allen said. “Until now there’s been an expectation under the old procedures that the bills would get heard … . From an individual Assembly member’s standpoint, it’s like, ‘these are good bills. I got them through the Assembly.’”
The return of legislators also underscored how working as a public figure now comes with an additional layer of risk: for lawmakers in the time of coronavirus, interacting with constituents and advocates has become an occupational hazard.
Assemblymember Autumn Burke (D-Marina del Rey) chairs the Assembly Revenue and Taxation Committee. She is also one of two assemblymembers to test positive for coronavirus, and she audibly fought back tears as she opened the hearing.
“I’d like to take a minute before we get into the bills just to thank everyone for being here. I know our job is important and I know what we do here is important,” Burke said. “Myself, obviously, has been exposed to the virus and I’ve recovered, but my staff has lost family from the virus while we were gone.”
A few feet away from Burke, Assemblymember Bill Quirk (D-Hayward) sat sheathed in both a filtered respirator mask and a face shield. The 73-year-old Quirk had been absent from the Capitol for months, unwilling to risk carrying the virus back to the retirement community where he lives.
When bills hit the Assembly floor in the weeks to come, Quirk’s colleagues may vote on his behalf under a proxy voting system recently established by Assembly Speaker Anthony Rendon.
“Thankfully, I was able to get a hold of sufficient PPE and felt comfortable and confident returning to finalize the last few weeks of Leg work,” Quirk said on Twitter.
Quirk also urged a detente with the Senate, noting to his colleagues that the other house “simply doesn’t have the bandwidth to hear all the bills.”
Top California Democrats announced on Monday a $100 billion stimulus plan that would borrow money from the federal government, expand tax credits for low-income Californians and offer help for small businesses in an attempt to prop up the state’s economy as the coronavirus-induced recession drags on.
The proposal, previewed with less detail two months ago, relies on a handful of tactics that members say will generate cash for California’s economy while securing services that benefit vulnerable residents.
Senate President Pro Tem Toni Atkins, D-San Diego, and Assembly Speaker Anthony Rendon, D-Lakewood, endorsed the proposal Monday. The group also includes Senate Majority Leader Bob Hertzberg, D-Van Nuys, and Budget Committee leaders Sen. Holly Mitchell, D-Los Angeles, and Assemblyman Phil Ting, D-San Francisco.
“We must do all we can to help heal our economy, while ensuring that our solutions do not create further harm,” Atkins said in a press release
Here’s what the plan includes:
- The plan would let Californians pre-pay their income taxes in exchange for future vouchers as a way to quickly collect billions of dollars to spur the economy.
- California would borrow federal dollars to continue unemployment insurance benefits at risk of being cut.
- Legislators want to expand the earned income tax credit for low-income workers and undocumented Californians with individual taxpayer identification number holders. Gov. Gavin Newsom for the first time in the 2020-2021 budget opened the tax benefit toundocumented immigrants with young children.
- Finally, the economic package would prioritize California’s “green economy” by funneling money to wildfire mitigation strategies and combating climate change by providing new incentives for electric vehicles and energy-efficient buildings.
The California Senate Republican Caucus issued a statement following the announcement that criticized Democrats for supporting the release of inmates during the pandemic, spending billions on homelessness “only to see the situation worsen” and harming small businesses.
“These summaries are broad strokes and some may sound appealing – but when it comes to California Democrats’ proposals, the devil is always in the details,” the statement said.
The plan arrives more than a month after the Legislature passed and Newsom signed a $202 billion budget that temporarily plugs a projected $54 billion deficit by deferring billions and using emergency federal money to shore up certain programs. Newsom and state lawmakers have urged Congress and the Trump administration to provide financial assistance to states, which would allow Califorria leaders to undo some spending cuts.
Republicans and Democrats in Washington, D.C., however, remain locked in disagreement over a new stimulus package, with opposing plans on unemployment insurance, funding for schools and COVID-19 testing support.
California’s unemployment rate stands at 14.9%, greater than at any time during the Great Recession.
“Millions of Californians are suffering in this economic downturn, and Republicans in Washington, D.C. don’t seem to care,” Rendon said via statement. “Assembly and Senate Democrats are advancing innovative proposals to help people and small businesses.”
California legislators have five weeks to pass hundreds of bills and tidy up the state budget before the end to the 2020 legislative session. The Democrats said they would collaborate with Newsom’s administration and the governor’s Task Force on Business and Jobs Recovery ahead of an Aug. 31 legislative deadline.
Newsom said Monday during a press conference that he had not had a chance to review the plan “in any detail,” but said he expected an emphasis on equity and inclusion.
“We have to include a framework of bringing people along as we reopen our economy and as we grow our economy,” Newsom said.
Legislators’ Media Release:
Having emulated the federal government by financing current spending with longer-term borrowing, legislative leaders now want to dive into the deep end of the debt pool with a $100 billion “economic stimulus plan.”
It’s a laundry list of public works and direct payments to Californians and businesses affected by the pandemic-induced recession, financed by “new revenues without raising taxes.”
“Millions of Californians are suffering in this economic downturn, and Republicans in Washington, D.C., don’t seem to care,” Assembly Speaker Anthony Rendon said in a statement as an outline of the plan was released on Monday. “Assembly and Senate Democrats are advancing innovative proposals to help people and small businesses.”
Some of the new benefits and projects would be financed by borrowing against existing revenue streams, such as speeding up highway projects by pledging future gas tax and motor vehicle fee proceeds. That at least makes some fiscal sense.
But while details are scant, it appears that the big money would come from authorizing the state treasurer “to issue future tax vouchers to generate billions of revenues for general economic stimulus efforts outlined in the plan.”
In other words, corporations, and perhaps high-income individual taxpayers, would be induced to make payments of future income taxes in return for certificates that could be used to pay those taxes when they are due — with, it’s assumed, direct or indirect interest payments to those who participate.
It’s similar in concept to the budget’s creating a big chunk of indirect debt by suspending some corporate tax breaks to generate $4.5 billion for the budget while allowing affected businesses to claim the tax credits in the future.
Unless extended by Newsom, the legislative session is due to end in a month, which leaves little time to fine-tune such a huge scheme. And we don’t know whether Newsom is on board, even conceptually, although he’s fond of “big, hairy, audicious goals.”
“I would be remiss to comment until I have a chance to review the details,” Newsom said at a news conference. “We have to include a framework of bringing people along as we reopen our economy.”
In part, the legislative stimulus plan seems aimed at fending off demands from the left wing of the Democratic Party for hitting corporations and wealthy Californians with new taxes to enhance recession relief programs.
Bob Schoonover of the Service Employees International Union immediately denounced the plan’s lack of new taxes, saying, “While we support many of the items listed in the Legislature’s plan, we cannot support the chicanery with which the Legislature proposes to secure them: taking from future generations without demanding that today’s billionaires and powerful corporations step up and contribute.”
Piling on debt for current spending is obviously risky, particularly since no one knows how long the pandemic and its recession will last. But raising taxes is also risky because it could spur further flights of corporations and the wealthy from California, taking jobs and tax payments with them.
This could be a defining political moment.
California’s attorneys general, the state’s top legal officers, have developed a bad habit in recent years — skewing the official titles of ballot measures.
Since all have been Democrats for the past two decades, that’s meant writing favorable titles for measures their party leaders favor and unfavorable ones for those Democrats oppose.
The current attorney general, Xavier Becerra, has continued the unsavory practice that violates the spirit, if not the letter, of Election Code Section 9051. It states that “in providing the ballot title and summary, the Attorney General shall give a true and impartial statement of the purpose of the measure in such language that the ballot title and summary shall neither be an argument, nor be likely to create prejudice, for or against the proposed measure.”
Becerra first displayed his penchant for creative writing two years ago on Proposition 6, a measure that, if passed, would have repealed a $5 billion a year package of taxes and fees on motorists.
Rather than simply stating that fact, Becerra’s title read, “Eliminates certain road repair and transportation funding. Requires certain fuel taxes and vehicle fees to be approved by the electorate.”
When Becerra released the title, proponents sued, and Superior Court Judge Timothy Frawley ordered the opening passage rewritten to declare that the measure “repeals recently enacted gas and diesel taxes and vehicle registration fees.”
However, the state court of appeal overturned Frawley, saying that state law gives the attorney general “considerable latitude” in drafting the official title.
There are 12 statewide measures on next November’s ballot and the official titles of 10 of them are straightforward and accurate. But those of the two most controversial, Propositions 15 and 22 are clearly slanted.
Proposition 15 would eliminate some of the property tax limits of Proposition 13, California’s iconic 1978 property tax law, for commercial properties such as warehouses and office buildings. Thus, it would sharply increase their tax bills by as much as $12 billion a year, with proceeds going to schools and local governments.
The measure is sponsored by labor unions and endorsed by many Democratic Party figures, including its presumptive presidential nominee, Joe Biden. Rather than simply describe Proposition 15 for what it does, Becerra’s official title summarizes it this way: “ Increases funding for public schools, community colleges, and local government services by changing tax assessment of commercial and industrial property.”
The business groups opposing Proposition 15 are, of course, complaining that the title doesn’t describe it as a Proposition 13 modification or a tax increase and say they may challenge it in court.
Proposition 22’s wording may also be headed to court. The measure would exempt Uber, Lyft and other similar transportation services using non-employee workers from a new state law, Assembly Bill 5, that requires them to make their drivers payroll workers. It does, however, provide their contract workers with some employee-like benefits.
The original title that Becerra’s office placed on the measure in January, before signature-gathering began, was “Changes employment classification rules for app-based transportation and delivery workers”
The final title, posted last week, says Proposition 22 “Exempts app-based transportation and delivery companies from providing employee benefits to certain drivers and delivery workers.”
The first title was an accurate summary of the measure. The second title mimics Proposition 22’s labor union opponents and is clearly biased against it.
Notwithstanding the merits or shortcomings of these measures, Becerra’s actions once again demonstrate that partisan attorneys general cannot play it straight. Therefore, title-writing should be shifted to a more independent, non-partisan authority.
National Public Radio
Water is a big deal in California, and climate change is threatening the precious resource. That’s why Gov. Gavin Newsom finalized a broad plan this week to help prevent future water challenges, but some Californians say it relies on old thinking and harmful water storage projects.
The Water Resilience Portfolio outlines 142 actions the state could take to build resilience as the effects of warming temperatures grow. It supports everything from a recent fund focused on safe and affordable drinking water to habitat restoration to improving groundwater storage capabilities.
It’s touted as a way to cope with the effects of climate change — more extreme droughts, floods, rising temperatures, declining fish populations and so on.
“Water is the lifeblood of our state, sustaining communities, wildlife and our economy,” Newsom said in a press release. “My administration has worked to assemble a blueprint to secure this vital and limited resource into the future in a way that builds climate resilience for all communities and sustains native fish and the habitat they need to thrive.”
The final version — a result of an April 2019 executive order — also notes that because of the “drastic downturn in the state’s budget situation” the pace of implementing the actions will depend on what resources are available, which means it’s an “aspirational document.”
“This blueprint establishes regional priorities that align challenges with opportunities for water-focused innovations like conservation, replenishing aquifers and direct potable reuse,” said Secretary for Environmental Protection Jared Blumenfeld.
The idea is supported by many farmers and others in the world of water who like the idea of a tunnel to carry Northern California Water south, which the plan supports.
“It will protect the water supply for essentially two-thirds of Californians from the very real risk of earthquakes, more extreme floods, prolonged droughts and sea level rise,” said Michael Quigley, Co-Chair of Californians for Water Security.
But creating a $17 billion one-tunnel project doesn’t sit well with environmental groups like Sierra Club California that have asked the administration to think of alternatives to diverting water from the San Francisco Bay-Delta. Kathryn Phillips, head of the group, says the new plan is very similar to the old one in that it includes the tunnel plan and building a new reservoir.
“His administration has shown a level of naivete about water policy in the state and that’s sort of jaw dropping,” she said. “They continue to believe that this project that was first proposed in the 1940s will still satisfy California’s water needs, even as we face a critical climate crisis that’s changing the way water flows.”
She says the idea should be scrapped and the focus put even more on preparing each region of California to withstand climate change instead of pulling water resources from one part of the state to another. The plan does support local communities in establishing sustainable groundwater solutions.
“The most important thing we need to do is to get to a place where we are truly regionally resilient,” she said. “That’s only going to happen when we stop making ourselves dependent on transporting increasing amounts of water from places where water is going to be declining [because of climate change].”
The plan, if funds allow, could accomplish a ton — protect Californians from pollution, modernize water data systems and present a unified pursuit of federal funding — but an analysis from the Pacific Institute says “there are still gaps that must be addressed.”
The group says the plan could do five things better:
- prioritize efforts with multiple benefits
- get involved in negotiations around the Colorado River
- include the business community more in decisions about water
- do even more for the Salton Sea
- advance projects to collect stormwater
The proposal does prioritize implementing a plan to provide safe and affordable drinking water to a million Californians who lack it. That’s a big deal for communities that are facing drought and outside factors like farms using water adjacent to rural communities, says Jonathan Nelson, policy director at the Community Water Center.
“We were excited to see that the very first recommendation in this pretty big document was on safe drinking water,” he said.
Even though safe drinking water is a priority, Nelson says the impact of the pandemic on the funding source — cap and trade dollars, the state’s system where pollution credits are bought and sold — is causing concern for securing water to Califonrians with dirty and unhealthy water.
“The most recent greenhouse gas fund auction was abysmal, almost no funding came in,” he said. “I think there are a lot of eyes on the next auction in August.”
Nelson says a secondary funding source needs to be thought up, but he also realizes with a tight state budget that may prove difficult to find.
“We need to figure out some sort of backup funding to address that gap and ideally we need to be putting that backup or that plan into place now before we realize … we’re running out of money and then try to figure it out,” he said.
The sweeping state proposal also underscores how climate change will impact each part of the state differently. That support could help places like the Sacramento region that have come up with plans to store water underground for dry times. The idea is called a water bank.
“A water bank is much like a bank,” said James Peifer, executive director of the Regional Water Authority. “You need to make a deposit first before you can make a withdrawal. So, what we want to do is store water first before we withdraw. That way, it’s better for the environment.”
Peifer says investing in a water bank before the climate warms too much could prevent hard times for people and wildlife that call the Sacramento region home.
“What it can do is provide for additional water supplies when we are experiencing dry times,” he said. “We might be able to provide some additional flows to the fishery to the lower American River … We will be able to provide water supplies for our own residents and businesses when we’re experiencing very dry periods in the future because of droughts.”
Water Resilience Portfolio:
Some of California’s key environmental programs for battling smog and climate change have lost nearly $105 million as the state grapples with the economic fallout of the coronavirus pandemic.
In a letter shared with CalMatters, the state’s Department of Finance notified lawmakers of reductions to funds from the proceeds of California’s landmark cap and trade program.
Millions were scraped away from the 2019-20 budgets of projects that include incentives for purchasing vehicles that produce less greenhouse gases, cleaning up pollution in overburdened communities, tackling methane excreted by cows and reducing smoke during prescribed burns.
These cuts are on top of $168 million squeezed from the original budgets of programs that are automatically allocated a proportion of the proceeds from cap and trade. Included are high speed rail, affordable housing and transit.
In the wake of cap and trade auctions generating $280 million less revenue than expected, the cuts are not a surprise to state departments that had been on notice to spend only three-quarters of their 2019 appropriations.
The shortfall fuels a growing fight about whether California’s cap and trade program can be relied upon to both cut carbon emissions and pay for green programs.
“It’s an unsustainable source of funding,” said Assemblymember Cristina Garcia, a Democrat from Bell Gardens and chair of the Joint Legislative Committee on Climate Change Policies. “Whether it was now or down the road, we knew that this was going to be a declining pot of money.”
Department of Finance Director Keely Martin Bosler told Assembly and Senate budget committees the cuts are spread evenly across ten agencies and departments. Each listed program loses about 14% of cap and trade funds appropriated in the 2019-2020 budget. Among those experiencing cuts are the California Environmental Protection Agency and its departments tasked with cleaning up air pollution, assessing environmental health hazards, managing garbage and recycling, and other projects.
The Legislature has not finalized how to spend the proceeds from cap and trade in the current budget year.
Erin Curtis, a California EPA spokesperson, said that the agency is still assessing how the cuts will impact its programs.
The largest cut in terms of dollars is at the California Air Resources Board, the agency responsible for cleaning up the state’s air pollution. It lost $81 million from the $557 million from cap and trade originally budgeted for its low-carbon transportationprogram, which includes clean vehicle vouchers and grants for new, advanced technologies for cars and heavy-duty engines.
Last year’s budget banked on cap and trade auctions generating $2.4 billion. But as the coronavirus pandemic rocked the economy, reality fell about $280 million short. The most recent auction in May raised less than $25 million.
Cap and trade is a cornerstone of the state’s fight against climate change. It is the first carbon market in the nation to cover all sectors of the economy — including oil refineries, power plants, fuel suppliers and manufacturers. The state is relying on it for nearly half of its promised reductions of planet-warming greenhouse gases in 2030.
The emissions trading program also is a major source of revenue: Companies can meet the declining cap on greenhouse gases by curbing pollution or by buying and trading pollution credits. Since its launch in 2013, cap and trade has raised $13.1 billion, with quarterly auctions for pollution credits raking in more than $600 million each over the past two years.
The state funnels the money into a wide range of programs — from fire prevention to high speed rail and safe drinking water.
The risk, however, is that cap and trade may not bring in as much money as expected. And that potential for a mismatch between expectation and reality is why a provision in the budget prohibits departments from spending more than 75% of their funding from the proceeds of cap and trade on certain programs before the May auction results are in.
This is the first year, however, that this provision has been triggered, according to Ross Brown, principal fiscal and policy analyst at the Legislative Analyst’s Office.
While the pandemic and economic crash has thrown California’s ability to pay for its environmental effort into turmoil, Garcia said that the crisis also accelerates the urgency of the programs. Communities that are disproportionately affected by pollution — Latino, Black, Asian American and lower-income Californians — also face greater threats from the coronavirus.
“We’re talking about racism, we have to be looking at it from all of our policies, and that includes environmental policies,” Garcia said. “Let’s think about sustainable sources of funding for them.”
In addition to funding for purchase of clean vehicle incentives, the cuts to the air board could also hit grants for local air districts to tackle pollution. Another $290,000 has been eliminated from an air board program that pays for projects aimed at monitoring and reducing smoke from prescribed burns.
The air board staff “will work to continue to deliver the benefits of the programs that will see about a 15 percent reduction in their funding,” spokesperson Stanley Young said in an email.
California Department of Resources’ Recycling and Recovery, or CalRecycle, saw a $3.6 million cut that will reduce grants and loans aimed at diverting waste from landfills. CalRecycle is re-evaluating its spending plan.
The California Department of Food and Agriculture will lose $4.9 million from programs subsidizing dairy digesters and manure management practices that curb methane released by cattle, which is a substantial source of greenhouse gases.
Garcia worries that across-the-board cuts will hit some programs harder than others.
“We’re not all starting in the same place,” Garcia said. “I think the departments cannot take this equal approach — everyone’s going to get a 14% cut — because the hurt is not the same.”
The $8.7 million cut from the Transformative Climate Communities grant program has already affected a round of funding for proposals from polluted, low-incomecommunities aimed at bolstering climate resilience, public health and equity while curbing greenhouse gases.
The program was able to fully fund a $28.2 million community improvement project in Oakland that includes creating affordable housing. But proposals from Riverside and Stockton received only partial awards. Riverside’s funding was supplemented by another grant, but a Stockton effort to fix sidewalks on a major thoroughfare, buy zero emission buses and increase solar power and energy efficiency will have to be altered, according to Louise Bedsworth, executive director of the California Strategic Growth Council, which runs the grant program.
Critics of cap and trade say they saw these shortfalls coming. Independent analysts have warned that an oversupply of pollution credits could hamper emissions reductions and decrease revenue. The nonpartisan Legislative Analyst’s Office has warned of an increased risk for low revenue in future auctions.
“These cuts are an unfortunate, but predictable result of the pandemic’s effect on our economy, and Cap and Trade policies that are too lenient on polluters,” said state Sen. Bob Wieckowski, a Democrat from Fremont, in an email to CalMatters.
In a June letter to Wieckowski first reported by CalMatters, California EPA Secretary Jared Blumenfeld pledged to review the program’s role in California’s climate fight.
“The advent of the COVID 19 Crisis, the collapse of the world oil market, and the results of [the California Air Resources Board’s] May 2020 Auction are all factors that deserve careful consideration,” he wrote.
Businesses covered by cap and trade, including oil companies and manufacturers, have argued against changing the program, saying in a June letter to the Legislature that it is not designed to be a source of revenue.
“When emissions are down, revenues will decrease. We understand the frustration of groups that have traditionally relied upon… cap-and-trade. However, changes to the market system do not guarantee that funding will be available,” the industry group wrote.
Environmental advocates and lawmakers are pushing for other sources of funding for the state’s green programs.
“This letter is a reality-check, and hopefully a renewed call to action for the Legislature to vote on new revenue sources to promote equity before they adjourn this August,” Katie Valenzuela, policy and political director for the California Environmental Justice Alliance, said.
U.S. energy consumption plummeted to its lowest level in more than 30 years this spring as the nation’s economy largely shut down because of the coronavirus, federal officials reported Wednesday.
The drop was driven by less demand for coal that is burned for electricity and oil that’s refined into gasoline and jet fuel, the U.S. Energy Information Administration said.
The declines were in line with lower energy usage around the globe as the pandemic seized up economies.
Those trends are turning around as commercial activity resumes but the impact has already been profound — including energy companies filing for bankruptcy protection and a forecasted dip in annual U.S. and global greenhouse gas emissions.
Overall U.S. energy consumption dropped 14 % during April compared to a year earlier, the energy administration said. That’s the lowest monthly level since 1989 and the largest decrease ever recorded in data that’s been collected since 1973.
The largest drop previously seen was in December 2001, after the Sept. 11 attacks shocked the economy and a mild winter depressed electricity demand.
Natural gas bucked the trend with a 15 percent increase in use during the April lockdown. More people at home meant more demand for natural gas as a heating fuel, while relatively few homes are heated with coal or oil, said Brett Marohl, who helped produce the energy administration findings.
Petroleum consumption fell to 14.7 million barrels a day in April, down almost a third compared to the same period in 2019. Demand already has rebounded some after stay-at-home orders expired and large sectors of the economy started moving again.
Led by people resuming some of their old driving habits, particularly in cities, petroleum consumption in June was back up to 17.6 million barrels a day, according to the American Petroleum Institute. But new drilling activity continued to be weak, declining in June for the seventh month in a row to 11 million barrels daily as stockpiles of oil and petroleum products remained near record levels.
The spring drop in oil demand coincided with a market collapse triggered by a price dispute between Russia and Saudi Arabia.
“While we are not out of the woods yet, we do appear to be headed in the right direction,” said Dean Foreman, the industry group’s chief economist.
Coal companies are expected to have an even tougher time recovering from the pandemic, which hit as the coal sector remained on a fairly steady downward spiral since 2007 despite President Donald Trump’s attempts to prop it up.
Coal consumption fell 27 percent in April compared to the same period in 2019, to 27 million tons. Most coal produced in the U.S. is used to generate electricity but many utilities have switched to cheaper natural gas and renewable sources like wind and solar.
The energy administration projects overall consumption will increase for the rest of 2020 but remain below 2019 levels.