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IN THIS ISSUE – “Frustrations Simmer…Questions Linger”
UNDER THE DOME
WATER & POWER
- Metropolitan Water Opens 1st Wastewater-to-Drinking-Water Plant
- Californians Love SUVs – Roadblock for Clean Air Goals
- Oil Companies Scramble For Cleaner Energy
CALIFORNIA CUTTING EDGE
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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FOR THE WEEK ENDING OCT. 11, 2019
Nearly one year into the Gavin Newsom era, Sacramento still isn’t certain what to make of the governor.
By many measures, it was a remarkably productive first nine month for Newsom, the former San Francisco mayor and lieutenant governor who cruised to election last November along with a Democratic supermajority in the California legislature. He presided over landmark deals on rent relief, charter schools and police shootings. He excited liberals with a more aggressive stance toward President Donald Trump. His first budget drew praise from both parties for exercising fiscal restraint while directing hefty sums toward homelessness and insuring undocumented immigrants, both issues gnawing at the state’s heavily Democratic base.
But frustrations simmered here in the nation’s most influential state capital, leaving lingering questions. Lawmakers, staff and interest group negotiators — many of whom spoke anonymously to avoid antagonizing a new governor as bills remain on his desk — pointed to false starts and mixed messaging that left them uncertain of where they stood, in addition to last-minute intercessions and a sense that Newsom made one-sided demands for votes. That dissension came despite the fact that Newsom dealt almost exclusively with lawmakers in his own Democratic Party because Republicans have so little power in Sacramento.
Some observers attributed missteps and muddled communications to the Capitol inexperience of Newsom himself and top aides. Newsom rarely engaged in the thick of legislative dealmaking as lieutenant governor, while some top staff — notably chief of staff Ann O’Leary, a former adviser to both Bill and Hillary Clinton — arrived unfamiliar with the Capitol’s ways.
Others saw an ambitious new governor who, in his desire to forge early breakthroughs in a variety of policy areas, had a habit of overextending himself, getting publicly ahead of closed-door realities and striving to mollify different groups in a way that could leave negotiators uncertain of where they stood.
As lawmakers prepare for Newsom’s second year, some said they were glad he supported bills that former Gov. Jerry Brown rejected — but intend to press Newsom on specifics earlier to avoid surprises. Others remain suspicious of his operating style and say he has lost credibility.
Rob Stutzman, who helped Gov. Arnold Schwarzenegger navigate his first year as his communications director, said much of the grumbling reflected the inevitable growing pains as a governor and legislators gauge one another.
“One thing you do constantly hear is the Legislature being unsure of what the governor wants, but it’s his first year,” Stutzman said. “He may have been trying to determine what he wants.”
But Stutzman cited two more vexing episodes, echoed in numerous interviews, that bookended Newsom’s year: his State of the State speech seemingly acknowledged that California’s high-speed rail project was a lost cause, leaving Newsom’s staff scrambling to reassure supporters and counteract reports that the project was dead; and his surprise demand for more amendments to a vaccination exemption measure after he had already sought and agreed to an earlier set of changes.
“With the vax issue, and we saw this with high-speed rail, he said one thing and did another — that’s troubling,” Stutzman said. “That’s unusual.”
One Democratic legislative aide said that as the year progressed, it became difficult to know if policy deals would stick.
“I think the feeling right now is you can’t trust anything that they say. Even if a staffer is acting in good faith, the situation is so chaotic within the Horseshoe that a staffer’s assumption your bill doesn’t have problems doesn’t necessarily amount to much,” the aide said, referring to the governor’s senior staff offices on the first floor of the Capitol.
Asked about such frustrations, Newsom spokesperson Nathan Click responded by underscoring accomplishments across a number of policy areas, saying in a statement that the governor has presided over “a huge amount” of progress “on some of the state’s most intractable problems,” running through a list ranging from renter assistance to charter school regulations.Inevitably, Newsom’s style invited comparisons to Brown, his predecessor — a man whose record Newsom compares himself to, unprompted, when talking to the press.
Brown had already served two terms before returning in 2011 and relied on a long-established inner circle familiar to Sacramento denizens. He also was more selective about what he became involved in and focused more on “big legislative achievements” like creating the Local Control Funding Formula for schools.
A source close to negotiations on the charter school deal likened Newsom’s style of leading to a “strong mayor” form of government compared to Brown. The source said Newsom’s desire to be involved “from very early on” left some legislators “annoyed.”
Other sources familiar with the charter negotiations said those involved felt “caught off guard” by what they say was Newsom’s attempt to appease dueling interests, especially since it forced his longstanding ally, the California Teachers Association, to accept changes sought by the California Charter Schools Association, which opposed the governor during last year’s primary.
While Brown would typically telegraph his position or intervene only on a handful of major priority policies, legislators said Newsom and his team would surprise them by jumping in late in the game to try and shape bills before they arrived on his desk. That late-breaking action irritated some.
“With Brown, you did your own thing, and if you reached out to his staff, you may get some input, but at least you knew exactly where he was coming from,” one source said. “The method of engagement is very different. I don’t know how much of it is because he’s brand new, but the surprises … it’s unlike anything I’ve ever seen.”
A senior Democratic legislative aide told POLITICO, “So many people said, ‘Oh, we talked to the administration, they were fine on our bill and then literally two days later they wanted amendments.’ That’s just unheard of. The Brown administration would be so embarrassed to be off-message in that way.”
Assembly Speaker Anthony Rendon said Brown came in with “fairly fixed ideas based on long experience” and a smaller set of priorities, while Newsom has shown more willingness to work with lawmakers. But there are always some growing pains in the first year.
“It’s still a learning process,” Rendon said. “It’s both a matter of us learning how to work with a new governor and the governor’s staff. Those who haven’t been here long have had to learn how the process functions in the Capitol.”
In May, Assemblywoman Cristina Garcia (D-Bell Gardens) and Assemblywoman Lorena Gonzalez (D-San Diego) stood next to Newsom at a podium celebrating a long-fought victory after the new governor agreed to exempt menstrual products and diapers from sales taxes in California.
They didn’t realize until days later that Newsom only wanted the exemption to last two years. Both lawmakers said they were surprised and disappointed.
“I initially thought it was going to be permanent,” Garcia told POLITICO in an interview. “They told me they were going to do this exemption in the budget, and I said, ‘Great, let’s do this.’”
Garcia said she learned a minute or two before the press conference with Newsom that there would be an expiration date. “I couldn’t get an answer on how long,” Garcia said. “Someone told me it was a two-year sunset. Someone else told me it was five years, then they said it was 10 years.”
She blamed herself for not pressing the administration earlier, but also said Newsom could have been more transparent. Gonzalez said she learned about the two-year sunset from reporters days later.
“I was asked about it and didn’t know, that’s never comfortable,” Gonzalez said about the sunset. “I learned about it from the media. It seemed odd.”
Ultimately, though, both said they were happy that Newsom agreed to an exemption that Brown rejected and viewed it as an opening to push further next year.
“These things happen,” Gonzalez said. “I don’t think it was intentional, I don’t think they were trying to deceive us. I just think it was miscommunication. I think we’re all trying to figure out how this governor communicates.”
On one of the year’s signature issues — a battle over labor in the gig economy, which pitted tech companies against organized labor — Newsom’s attempts to balance both sides fueled discontent. Unions wanted to enshrine in state law a California Supreme Court ruling deeming more workers to be employees, rather than independent contractors, with Assembly Bill 5. Tech companies like Uber said re-classification would be ruinous for their business models.
While Newsom ended up proclaiming his support for AB 5, his administration’s role in seeking a compromise at times alienated organized labor. That was illustrated most starkly when the head of California’s powerful building trades union lost a spot on a Future of Work panel and then blasted the Newsom for his openness to the gig companies.
Just hours after the Legislature passed AB 5, with supporters assailing gig companies and lauding a watershed moment for workers, The Wall Street Journal published a story in which Newsom said he was “committed” to continuing negotiations with “Uber, Lyft, DoorDash, others, some of the gig platforms.” A day later, Uber would cite that language in a press release essentially defying California by saying the company would not re-classify workers.
Some within labor seethed. In their moment of triumph, here was the governor sending a signal of encouragement to companies they’d just denounced as standing in the way of progress.
On renters’ issues, too, Newsom sowed confusion before eventually striking a far-reaching deal.
After breaking with many Democrats by not supporting a 2018 rent control ballot initiative, Newsom said early in the year he would support a rent deal. But his engagement on the issue was uneven in the early going, sources said, and O’Leary ended up calling members to apologize after she promised housing advocates that Newsom wanted to move every rent bill then before them — a surprise to lawmakers who had not heard from Newsom’s office.
“This was a brand-new administration, so people were still learning about and figuring out how to negotiate with the governor and his staff,” said a lawmaker who asked not to be named in order to speak freely, “and that wasn’t a helpful moment.”
Similarly, when Newsom told reporters in August about engaging in a “long overdue” effort to enact renter protections and avert “another costly ballot fight,” he surprised lawmakers by trying to push the process forward. His office subsequently increased its engagement, producing a deal that surmounted opposition from real estate agents to pass. The final result — a win for the governor — belied the confusing and choppy process.
Legislators had similar criticisms of the administration pushing for tough votes in a manner seen as demanding a win without taking their starkly different political milieus into account. Tensions tautened as Newsom and his staff pushed lawmakers to pass a clean drinking water tax, a signature issue of his that collided with an aversion to new taxes among legislators in competitive districts, or to conform California’s tax code to federal changes in order to fund an expanded earned-income tax credit.
A senior legislative staffer summarized those conversations as: “I’m not negotiating, I’m just listening to a laundry list of their desires which they attribute to the governor.”
Others, however, saw it as preferable to learning of the governor’s opposition via a veto message, particularly given how many legislators tried again with Newsom on bills Brown had nixed.
And Newsom earned praise for getting results on thorny but urgent issues like housing. Dan Dunmoyer, who served in the Schwarzenegger administration and now heads the California Building Industry Association, said it was “very common” for a first-year governor to experience growing pains with hammering out a negotiating style and establishing a clear staff hierarchy — and he said Newsom still came through on a central campaign vow.
“Housing has been something he kept front and center from a policy and public communication perspective. his predecessor didn’t do that,” Dunmoyer said, adding that “the governor has made it politically cool to talk about trying to solve the housing crisis … rhetoric does matter when it comes to pushing policy.”
Assemblyman David Chiu (D-San Francisco) carried the rent cap bill that Newsom’s dealmaking helped push across the finish line despite opposition from the politically powerful California Association of Realtors. Chiu acknowledged that the bill “experienced a circuitous route” and that Newsom’s public call for a deal surprised him, but he said Newsom still played an invaluable role.
“We were very appreciative of governor’s engagement,” Chiu said.
Gov. Newsom’s statutory deadline for signing or vetoing bills – there is no “pocket veto” in California – is Sunday. Follow the final actions here:
Gov. Gavin Newsom this week vetoed a perennial effort by his fellow Democrats to hamstring business and conservative groups’ use of statewide ballot measures.
Assembly Bill 1451 would have prohibited qualifying ballot measures by paying professional circulators on a per-signature basis, but gave Democrats’ union allies a carveout.
Paraphrasing former Gov. Jerry Brown’s veto of a virtually identical bill, Newsom said AB 1451 “would make the qualification of many initiatives cost-prohibitive…”
With AB 1451 out of the way, the lineup of 2020 ballot measures becomes a little clearer — but only a little.
One initiative, removing some of Proposition 13’s property tax limits from commercial property, has already qualified, but its sponsors — labor unions, primarily — are setting it aside and will seek signatures on a replacement they hope will prove more palatable to voters.
The California School Boards Association says it will propose another tax measure as well, one that would raise income taxes on large corporations and the state’s highest income residents to raise about $15 billion a year for schools.
One referendum to repeal a law that eliminates cash bail for those accused of crimes, has also been qualified. The bail bond industry will tell voters that eliminating cash bail will mean more criminals running free on the streets — a message that advocates of another pending crime measure will echo.
Backed by some law enforcement and victims’ rights groups, the proposal would undo portions of Proposition 57, a 2016 initiative that Brown sponsored to reduce penalties for some crimes deemed to be “non-violent,” although critics say it benefited some clearly violent felons as well.
Still another potentially high-octane measure would repeal or change Assembly Bill 5, the highly contentious legislation that implements a state Supreme Court decision and would convert hundreds of thousands of contract workers into payroll employees.
Three “gig economy” firms that rely on contract drivers, Uber, Lyft and DoorDash, have publicly pledged $90 million for such a ballot measure. If they proceed, it potentially becomes leverage for a legislative compromise, but the timeline for qualifying an initiative looms, so if Uber, et al, are going to move, they’d better do it soon.
This year, Newsom and the Legislature enacted a relatively mild rent control law that applies only to older apartment houses and allows annual increases of 5% plus inflation.
One motive was to stave off another ballot measure war over rent control, but the prime mover behind a failed 2018 measure, Michael Weinstein of the AIDS Healthcare Foundation, is collecting signatures for a new version.
There’s a similar scenario regarding another hot issue, personal privacy.
Bay Area developer Alastair Mactaggart qualified an initiative for last year’s ballot aimed at protecting private data from commercial exploitation, but set it aside as Brown and the Legislature enacted their own version. Mactaggart has now filed a new measure to restrict use of children’s data.
Finally, a coalition headed by Consumer Attorneys of California — lawyers who handle personal injury cases — wants to hollow out a law that Brown signed in 1975, dubbed MICRA, that limits pain and suffering damages in medical malpractice cases to $250,000.
Their initiative renews the lawyers’ 44-year political war with medical providers and their insurers and, like several other proposals, could become leverage for a legislative compromise.
Orange County Register
In its effort to establish a new, drought-proof source of water that could serve a half-million Southern California homes, the Metropolitan Water District on Thursday, Oct. 10 unveiled a $17 million pilot plant that will bring wastewater to drinkable standards.
Water from the trial project in Carson will not be piped to customers – it will be put back with regularly treated wastewater and pumped into the ocean.
But it’s a key step toward construction of a working plant that would reduce the region’s dependence on imported water.
“Mother Nature doesn’t just give us water – she recycles the water,” said Rep. Grace Napolitano, D-Norwalk. “We do it technologically.”
Napolitano, a longtime advocate for recycling water, was among a host of speakers at Thursday’s grand opening of the pilot plant. Some 300 water officials elected officials and environmentalists attended.
Like a similar project in Orange County that already recycles enough wastewater to serve about 350,000 homes, the Carson project filtration system would use reverse osmosis as a key part of the purification process. As in Orange County, the resulting potable water would be used to recharge groundwater basins.
But Metropolitan officials also foresee the possibility of piping purified wastewater directly to customers in a process some dub “toilet-to-tap,” skipping the step of first putting it into the ground – or into a reservoir for mixing with other water supplies, as is done in San Diego.
So far, nowhere in the state has such a direct potable reuse system. In fact, California doesn’t yet have a process for approving such a plant.
“We want to help establish that process in the state,” said John Bednarski, Metropolitan’s chief engineer. “We’re kind of leading the way.”
While the trial project will produce 500,000 gallons per day, the full-size plant as envisioned would purify 150 million gallons. Estimated cost of a final plant is $3.4 billion, with construction beginning as early as 2024 and completion as soon as 2027 if all goes smoothly with the pilot, Bednarski said.
The state’s 2011-2015 drought underscored Southern California’s vulnerability to inadequate water supplies. The four-year stretch was California’s driest on record, with some experts predicting that climate change will make such extreme droughts more common.
Southern California relies on the Metropolitan Water District to import 45% of the water supplied to 19 million residents in six counties. New local sources of water provide buffers against both local droughts and decreased availability of flows from Northern California and the Colorado River.
The Orange County Water District has been a leader in recycling wastewater for potable use, launching its plant operations in 2008.
After purifying the water at its Fountain Valley plant, it pumps 100 million gallons into the groundwater basin daily. Member water agencies then draw the water back out, give it final treatment and pipe it to customers.
Already billed as “the world’s largest water purification system for indirect potable reuse,” the Orange County system is about to undergo a $292 million expansion that would increase its daily capacity to 130 million gallons a day.
That would allow potable recycled water to serve 1 million people – nearly a third of the county’s population. Construction is expected to begin before the end of the year, with completion in 2023.
The cost of Orange County’s purified wastewater is $602 an acre-foot (326,000 gallons), far cheaper than imported water at $1,100 an acre-foot, according to Orange County Water District statistics.
The cost of purified water that would be produced at the Carson plant is pegged at $800 an acre-foot – but the 60 miles of new pipeline needed to distribute it would bring the cost to $1,800, according to Bednarksi.
But it would still be worth it because of the hedge against drought and against earthquakes shutting down import lines, he said.
But Mickey Chadhuri, Metropolitan’s assistant chief of operations, doesn’t see it that way.
“There’s still plenty of room for local projects,” he said.
Bednarski, meanwhile, dismissed concerns that the Carson project could jeopardize the availability of Metropolitan subsidies for local water projects such as desalination plants.
“They’re two separate pots of money,” he said.
Current plans for the Poseidon plant are contingent on the project receiving a Metropolitan subsidy, with the El Segundo and Doheny proposals expected to also seek such assistance.
California is not on track to meet its greenhouse gas emission goals, in part because Californians just aren’t ready to give up their trucks and SUVs.
A new study by nonprofit group Next 10 and Beacon Economics found Californians in late 2018 owned more gas-guzzling pickups, mini-vans and SUVs than they did five years ago. Those vehicles made up 57.3 percent of new vehicle registrations in 2018, compared to 39.3 percent in 2013.
The wildfires that scorched California in 2017 and 2018 were another setback, pumping tens of millions of tons of carbon into the atmosphere and offsetting the state’s efforts to curtail man-made greenhouse gas emissions.
The new report from Next 10 and Beacon Economics shows that the Golden State is unlikely to reach its carbon reduction goals for 2030 and 2050 at the current rate of progression. A law signed by former Gov. Jerry Brown in 2016 sets a target of cutting the state’s greenhouse gas emissions to 40 percent below 1990 levels by 2030.
“Assuming the same rate of reduction from 2016 to 2017, California will reach its 2030 and 2050 goals in 2061 and 2157, respectively — representing a 31-year and a 107-year delay,” according to the report.
The report comes as California is locked in a dispute with President Donald Trump about the state’s legal authority to impose stricter air pollution standards on vehicles. The California Air Resources Board has used that power to negotiate pacts with carmakers committing them to producing fuel-efficient vehicles that average 50 miles per gallon of gas.
The Trump administration has sought to revoke California’s regulatory power, and moved to impose a less aggressive target for fuel efficiency of 37 miles per gallon. Trump on Twitter wrote his plan would let car manufacturers “produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER.”
California “has some hard truths to face as it looks to deliver much steeper annual emissions reductions in the years ahead,” wrote study co-author Noel Perry of Next 10.
Transportation makes up a significant amount of the state’s total emissions; it accounted for 41.1 percent of the state’s total greenhouse gas emissions, according to the California Air Resources Board.
California lawmakers and the Air Resources Board have been devising incentives to persuade more people and businesses to buy electric cars and other zero-emission vehicles. Frito-Lay last week, for instance, unveiled a fleet of electric semi-trucks that it bought in part with stat grants.
Lawmakers weighed a bill this session to expand the rebate for buying an electric car to $7,500; that bill has been made into a two-year bill.
The state has seen a rise in electric car ownership, with electric vehicle use up 37 percent in 2017, but Adam Fowler of Beacon Economics said more bold action is needed to reduce transportation-based greenhouse gas reduction.
“The time for timidity is passed, especially around transportation,” Fowler said.
One proposal few would call timid is to remove gas-powered vehicles from the road. Assemblyman Phil Ting, D-San Francisco, in 2017 proposed a bill that would have been sales of new gas-powered cars by 2030. It didn’t pass, but Democratic presidential candidates are now including the proposal as part of their platforms.
The report also raised concern about the emissions produced by California’s wildfires. In 2018, wildfires put so much greenhouse gas into the atmosphere that they exceeded, nine times over, the amount of emissions reduced in 2017.
Wildfires in 2018 burned more than 1.8 million acres of land, and accounted for more emissions in California than did the state’s commercial, residential and agricultural sectors did in 2017.
Wildfires pumped 45.5 million metric tons of carbon into the atmosphere in 2018, a 24 percent increase from the year before.
“What we’re learning is that climate successes can be fragile — and one devastating fire can eclipse hard-won emissions reductions gains,” Perry said in the report.
The report also noted that devastating wildfires are becoming more frequent, with 10 of the state’s most destructive fires all occurring since 2010, and 19 of the worst fires having occurred within the last 30 years.
Both Perry and Fowler said California can still reach the goal its put into law.
“Even though this is a sobering report in terms of the goals in front of us, very big goals, I remain optimistic,” Perry said. “California historically has been very successful in being a worldwide innovator when it comes to climate change policy. We need these ambitious policies to drive transformative change.”
California has undertaken several measures to reduce emissions and cut the state’s carbon footprint.
Critics of those efforts say they drive up the cost of electricity to consumers, and that businesses forced to buy pollution credits through the cap-and-trade program pass new fees on to Californians. A report compiled by the U.S. Chamber of Commerce this year showed that Californians pay higher rates for electricity than residents of 43 other states.
Fowler said still more action is needed to achieve the state’s environmental goals..
“We’re at an inflection point, and transformative change from the policy realm that opens up markets and spurs innovation is something we need from a number of sectors in our economy,” he said.
Next 10 Report:
Two decades ago, John Browne rocked the oil industry by saying that the “possibility cannot be discounted” of a link between man-made carbon emissions and global warming, and that it was time for “action.” In 1997, Mr. Browne, then chief executive of BP, the London-based oil company, was a lonely voice among his peers.
How much has changed since his speech? Most large oil companies no longer deny the connection between burning fossil fuels and climate change. In fact, they are scrambling to position themselves to be seen as part of the solution to what is increasingly seen by worried citizens as a major threat.
Royal Dutch Shell, the European oil company, France’s Total and others are putting substantial funds into clean-energy investments. Several companies have formed the Oil and Gas Climate Initiativeto invest in low-carbon technologies and reduce the powerful greenhouse gas, methane.
The companies are trying to deal with what is shaping up as a major threat to their businesses: societal demands, especially in Europe, for a sharp curtailment of the consumption of the oil and gas that are the lifeblood of these organizations. “Climate change poses an existential risk to the oil and gas industry,” wrote Neil Beveridge, an analyst at Bernstein, a Wall Street research firm, in a recent note to clients.
Yet about a third more oil is being burned than in the late 1990s, mostly because increasing numbers of consumers in countries like China and India have the means to drive cars, fly on airplanes and buy products made of oil-based plastic.
And there is skepticism among people familiar with the industry about whether the world will be able to phase out fossil fuels like oil, gas and coal as would seem to be required to maintain global temperatures within what are deemed safe limits. “Trillions of dollars would be needed” to replace current energy systems with wind and solar, Mr. Beveridge said in an interview.
He noted the peculiar situation in which the oil and gas industry finds itself. It is close to being shunned by environmentalists and some investors, but, at the same time, “pretty essential to making the world go around,” he said.
Confronted with these dilemmas, oil companies are taking quite different approaches. Shell, for instance, is putting money into alternative-energy investments, especially in electricity.
Shell has put together the beginnings of an electricity business in recent years, buying pieces like a small British utility, a Dutch electric-vehicle charging start-up and investing in offshore wind generation. These investments aim to position Shell for a new energy age that may be anchored in clean electric power for vehicles and other uses rather than fossil fuels.
In an interview, Ed Daniels, executive vice president for strategy at Shell, said the company recognized that to achieve the goals of the 2015 Paris Agreement on climate “enormous change was needed in the energy systems,” which are responsible for a large proportion of greenhouse gases. Shell, he said, wanted to help lead that shift, a role he said was “fundamental for the long-term success of the company.”
Shell seems to be edging away from being an oil company. Chevron, the American company, is not. Instead, it seems to be focusing on making its oil and gas operations more efficient and less emissions intensive. Chevron argues that it would be a mistake to force well-run companies to reduce their oil and gas production. Indeed, there may be scope for the most efficient producers to increase their oil and gas output, while still meeting climate change goals, the company says.
“You can increase your fossil-fuel production, deliver superior returns for your shareholders, and still be compliant with Paris, “ said Michael Rubio, Chevron’s general manager for environmental, social and governance engagement.
Critics say that oil companies are not backing up their talk of concern about climate change with dollars. While companies are making green-energy investments, a much larger proportion of most oil companies’ spending is going into oil and gas projects that produce greenhouse gas emissions.
“We have yet to see their capital spending match their words and reflect a recognition that they need to embrace the transition,” said Fred Krupp, president of the Environmental Defense Fund, which has worked with the industry to reduce greenhouse gases.
Analysts say that Shell is already a leader among the major oil producers in moving toward low-carbon energy, yet from some perspectives the industry, and even Shell, are moving too slowly to head off what environmentalists fear may be global calamity with higher temperatures wiping out crops, generating powerful storms and creating other dangers.
Valentina Kretzschmar, an analyst at Wood Mackenzie, a market research firm, figured that from 2016 to 2018 seven major oil companies, including Shell and Exxon Mobil, spent $5.8 billion on alternative-energy acquisitions, about 5 percent of their outlays on oil and gas deals and new ventures in these emissions-producing fuels. Shell said it planned to spend $1 billion to $2 billion a year on what it called new energy investments, a small amount compared with $25 billion or more in overall capital outlays.
Why the relatively paltry sums? Ms. Kretzschmar said the companies were still feeling their way in what was unfamiliar territory for them.
In making such deals, oil companies have their eyes on several constituencies. There is a growing body of shareholders wary of investing in oil companies, either because they disapprove of the role that their products play in climate change or they worry that oil will not be used in the future. If so, it follows that the troves of oil and gas that companies own rights to will be stranded in the ground.
The companies, though, think they will alienate some investors and see their shares pummeled if they are perceived as wasting money or putting it into businesses that do not produce satisfactory profits and the cash to pay generous dividends. “Any larger investment would probably be difficult for shareholders to digest,” Ms. Kretzschmar said. Alternative energy ventures are viewed as a less profitable business than oil and gas.
Mr. Daniels said Shell was aiming for 8 percent to 12 percent profits on the company’s new energy investments. Stuart Joyner, an analyst at Redburn, a market research firm, said there were not many large-scale alternative energy projects that could absorb the very large investments that oil companies were in the habit of making.
One area that does seem to be working in this regard is building enormous wind farms for electricity generation. Government subsidies helped lift this business off the ground in Northern Europe and it is spreading to the United States and Asia.
The investments required for offshore wind can be very large, and some of the oil companies are starting to play. Norway’s Equinor, the former Statoil, was part of a joint venture that won a preliminary deal on Sept. 20 to build what will be the world’s largest wind farm in Dogger Bank in the North Sea off eastern England at an overall cost of 9 billion pounds (about $11 billion).
Some investors conceded that oil companies will need time to shift.
“I am very conscious that this is a multidecade-long transition,” said Adam Matthews, head of ethics and engagement at the Church of England Pensions Board, which supports retired church personnel. However, Mr. Matthews, who has talked with oil companies to push them toward greener practices, said there were “a large number of laggards” in the oil business “that have yet to move.”
The distance between oil companies and what investors, environmentalists and, electorates expect from them seems destined to widen.
The first data from an experiment in a California city where needy people get $500 a month from the government shows they spend most of it on things such as food, clothing and utility bills.
The 18-month, privately funded program started in February and involves 125 people in Stockton. It is one of the few experiments testing the concept of “universal basic income,” an old idea getting new attention from Democrats seeking the 2020 presidential nomination.
Stockton Mayor Michael Tubbs has committed to publicly releasing data throughout the experiment to win over skeptics and, he hopes, convince state lawmakers to implement the program statewide.
“In this country we have an issue with associating people who are struggling economically and people of color with vices like drug use, alcohol use, gambling,” he said. “I thought it was important to illustrate folks aren’t using this money for things like that. They are using it for literal necessities.”
But critics say the experiment likely won’t provide useful information from a social science perspective given its limited size and duration.
People in the program get $500 each month on a debit card, which helps researchers track their spending. But 40% of the money has been withdrawn as cash, making it harder for researchers to know how it was used. They fill in the gaps by asking people how they spent it.
Since February, when the program began, people receiving the money have on average spent nearly 40% of it on food. About 24% went to sales and merchandise, which include places like Walmart and discount dollar stores that also sell groceries. Just over 11% went to utility bills, while more than 9% went to auto repairs and fuel.
The rest of the money went to services, medical expenses, insurance, self-care and recreation, transportation, education and donations.
Of the participants, 43% are working full or part time while 2% are unemployed and not looking for work. Another 8% are retired, while 20% are disabled and 10% stay home to care for children or an aging parent.
Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, said people aren’t likely to change their behavior if they know the money they are getting will stop after a year and a half. That’s one reason why he says the experiment is “really more about story telling than it is about social science.”
Plus, he said previous studies have shown people don’t spend the money on frivolous things.
“What you get out of a program like this is some fairly compelling anecdotes from people,” he said. “That makes for good public relations if you are trying to drum up interest in a basic income program, but it doesn’t really tell you much about what a basic income program would do if implemented on a long-term and large-scale basis.”
The researchers overseeing the program, Stacia Martin-West at the University of Tennessee and Amy Castro Baker at the University of Pennsylvania, said their goal is not to see if people change their behavior, but to measure how the money impacts their physical and mental health. That data will be released later.
“People are using the money in ways that give them dignity or that gives their kids dignity,” Castro-Baker said, noting participants have reported spending the money to send their children to prom, pay for dental work and buy birthday cakes.
Zohna Everett, 48, and her husband are among the recipients. When the experiment started, she was unemployed and her husband was making $110 a day as a truck driver. They were always late paying their bills, and the pressure caused problems with their marriage.
Once she got the money, Everett set it up to automatically pay bills for her electricity, car insurance and TV. She donates $50 a month to her church and still has some left over for an occasional date night with her husband. And the extra income was enough of a cushion to allow her husband to pay off her wedding ring with their other income.
She said she and her husband now both have jobs working at the Tesla plant in Fremont.
“I think people should have more of an open mind about what the program is about and shouldn’t be so critical about it,” she said. “A poor person knows how to budget.”