Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Article
  • Published:

Equitable low-carbon transition pathways for California’s oil extraction

Nature Energy volume 8, pages 597–609 (2023)Cite this article

Subjects

Abstract

Oil supply-side policies—setbacks, excise taxes and carbon taxes—are increasingly considered for decarbonizing the transportation sector. Understanding not only how such policies reduce oil extraction and greenhouse gas (GHG) emissions but also which communities receive the resulting health benefits and labour-market impacts is crucial for designing effective and equitable decarbonization pathways. Here we combine an empirical field-level oil-production model, an air pollution model and an employment model to characterize spatially explicit 2020–2045 decarbonization scenarios from various policies applied to California, a major oil producer with ambitious decarbonization goals. We find setbacks generate the largest avoided mortality benefits from reduced air pollution and the largest lost worker compensation, followed by excise and carbon taxes. Setbacks also yield the highest share of health benefits and the lowest share of lost worker compensation borne by disadvantaged communities. However, currently proposed setbacks may fail to meet California’s GHG targets, requiring either longer setbacks or additional supply-side policies.

This is a preview of subscription content, access via your institution

Access options

Buy this article

  • Purchase on Springer Link
  • Instant access to full article PDF
Buy now

Prices may be subject to local taxes which are calculated during checkout

Fig. 1: Summary of data and methods.
Fig. 2: California crude oil production and associated GHG emissions pathways.
Fig. 3: Health, labour and climate impacts from California’s oil-production pathways under different policies relative to BAU.
Fig. 4: Correlations between health and labour impacts with oil-field characteristics.
Fig. 5: DACs’ share of health and labour impacts.
Fig. 6: Comparison between setback policies applied to new and all wells.

Similar content being viewed by others

Data availability

Data on assets and asset-level costs from Rystad Energy and employment and worker compensation data from IMPLAN are proprietary. All other datasets are publicly available and were collected online from California Department of Conservation, US Energy Information Administration, International Energy Agency, California Air Resources Board, California Office of Environmental Health Hazard Assessment, California Department of Finance, the Environmental Benefits Mapping and Analysis Program - Community Edition (BenMAP-CE), National Historical Geographic Information System, Congressional Budget Office, InMAP and the US Census Bureau. All publicly available datasets are available on Zenodo at https://doi.org/10.5281/zenodo.7742802 with the exception of InMAP and BenMAP-CE data, which can be downloaded directly from the software. The Zenodo repository includes raw input data files that are not proprietary, intermediate data files to run the models and final results files to create the figures. A detailed readme file includes descriptions of all data used in the study. Source data are provided with this paper.

Code availability

All code used to conduct the study is available at https://github.com/emlab-ucsb/ca-transport-supply-decarb.

References

  1. OECD.Stat (OECD, 2022); stats.oecd.org

  2. California GHG Emissions Inventory Data (CARB, 2022); https://ww2.arb.ca.gov/ghg-inventory-data

  3. Hensher, D. A. Climate change, enhanced greenhouse gas emissions and passenger transport—what can we do to make a difference? Transp. Res. Part D Transp. Environ. 13, 95–111 (2008).

    Article  Google Scholar 

  4. Sperling, D. & Eggert, A. California’s climate and energy policy for transportation. Energy Strategy Rev. 5, 88–94 (2014).

    Article  Google Scholar 

  5. Creutzig, F. et al. Transport: a roadblock to climate change mitigation? Science 350, 911–912 (2015).

    Article  Google Scholar 

  6. Morrow, W. R., Marano, J., Hasanbeigi, A., Masanet, E. & Sathaye, J. Efficiency improvement and CO2 emission reduction potentials in the United States petroleum refining industry. Energy 93, 95–105 (2015).

    Article  Google Scholar 

  7. Lepitzki, J. & Axsen, J. The role of a low carbon fuel standard in achieving long-term GHG reduction targets. Energy Policy 119, 423–440 (2018).

    Article  Google Scholar 

  8. Jenn, A., Azevedo, I. L. & Michalek, J. J. Alternative-fuel-vehicle policy interactions increase U.S. greenhouse gas emissions. Transp. Res. Part A Policy Pract. 124, 396–407 (2019).

    Article  Google Scholar 

  9. Andersson, O. & Börjesson, P. The greenhouse gas emissions of an electrified vehicle combined with renewable fuels: life cycle assessment and policy implications. Appl. Energy 289, 116621 (2021).

    Article  Google Scholar 

  10. Lazarus, M. & van Asselt, H. Fossil fuel supply and climate policy: exploring the road less taken. Climatic Change 150, 1–13 (2018).

    Article  Google Scholar 

  11. Fæhn, T., Hagem, C., Lindholt, L., Mæland, S. & Rosendahl, K. E. Climate policies in a fossil fuel producing country’s: demand versus supply side policies. Energy J. 38, 77–102 (2017).

    Google Scholar 

  12. Kunce, M. Effectiveness of severance tax incentives in the U.S. oil industry. Int. Tax Public Finance 10, 565–587 (2003).

    Article  Google Scholar 

  13. McCollum, D. L. et al. Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals. Nat. Energy 3, 589–599 (2018).

    Article  Google Scholar 

  14. Schwanitz, V. J., Piontek, F., Bertram, C. & Luderer, G. Long-term climate policy implications of phasing out fossil fuel subsidies. Energy Policy 67, 882–894 (2014).

    Article  Google Scholar 

  15. Larson, E. et al. Net-Zero America: Potential Pathways, Infrastructure, and Impacts (Princeton Univ., 2020).

  16. Williams, J. H. et al. Carbon-neutral pathways for the United States. AGU Advances 2, e2020AV000284 (2021).

    Article  Google Scholar 

  17. Brown, A. L. et al. Driving California’s Transportation Emissions to Zero (Institute of Transportation Studies, Univ. of California, 2021); https://doi.org/10.7922/G2MC8X9X

  18. Mayfield, E., Jenkins, J., Larson, E. & Greig, C. Labor pathways to achieve net-zero emissions in the United States by mid-century. Energy Policy 177, 113516 (2023).

    Article  Google Scholar 

  19. California’s Draft 2022 Scoping Plan (CARB, 2022).

  20. Governor Newsom Takes Action to Phase Out Oil Extraction in California (Office of Governor Gavin Newsom, 2021); https://www.gov.ca.gov/2021/04/23/governor-newsom-takes-action-to-phase-out-oil-extraction-in-california/

  21. Deschenes, O. et al. Enhancing equity while eliminating emissions in California’s supply of transportation fuels. Zenodo https://doi.org/10.5281/zenodo.4707966 (Environmental Markets Lab, Univ. of California, 2021).

  22. Tessum, C. W., Hill, J. D. & Marshall, J. D. InMAP: a model for air pollution interventions. PLoS ONE 12, e0176131 (2017).

    Article  Google Scholar 

  23. Squibb, J. & Thorvaldson, J. IMPLAN’s Gravity Model and Trade Flow RPCs (IMPLAN Group, 2020).

  24. IMPLAN Data Sources (IMPLAN Group, 2020); https://implanhelp.zendesk.com/hc/en-us/articles/115009674448-IMPLAN-Data-Sources

  25. Lewis, C., Greiner, L. H. & Brown, D. R. Setback distances for unconventional oil and gas development: Delphi study results. PLoS ONE 13, e0202462 (2018).

    Article  Google Scholar 

  26. Ferrar, K. People and Production: Reducing Risk in California Extraction Fractracker (Fractracker, 2020); https://www.fractracker.org/2020/12/people-and-production/

  27. Colorado Oil & Gas Conservation Commission Unanimously Adopts SB 19-181 New Mission Change Rules, Alternative Location Analysis and Cumulative Impacts (COGCC, 2020).

  28. Draft Rule for Protection of Communities and Workers from Health and Safety Impacts from Oil and Gas Production Operations Pre-rulemaking Release for Public Review and Consultation (Department of Conservation, 2022); https://www.conservation.ca.gov/calgem/Documents/public-health/PHRM%20Draft%20Rule.pdf

  29. Annual Energy Outlook 2021—Table: Table 12. Petroleum and Other Liquids Prices (EIA, 2021); https://www.eia.gov/outlooks/aeo/data/browser/#/?id=12-AEO2021&region=0-0&cases=highprice~lowprice~aeo2020ref&start=2019&end=2045&f=A&sourcekey=0

  30. WellSTAR Oil and Gas Well Monthly Production (Department of Conservation, 2020); https://wellstar-public.conservation.ca.gov/General/Home/PublicLanding

  31. Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis—Under Executive Order 12866 (US Government Interagency Working Group on Social Cost of Greenhouse Gases, 2016); https://www.epa.gov/sites/production/files/2016-12/documents/sc_co2_tsd_august_2016.pdf

  32. Regulatory Impact Analysis for the Proposed Standards of Performance for New, Reconstructed, and Modified Sources and Emissions Guidelines for Existing Sources: Oil and Natural Gas Sector Climate Review (US EPA, 2021).

  33. The Benefits and Costs of the Clean Air Act from 1990 to 2020 (US EPA, 2011).

  34. Neidell, M. Air Pollution and Worker Productivity (IZA World of Labor, 2017).

  35. Lobell, D. B., Di Tommaso, S. & Burney, J. A. Globally ubiquitous negative effects of nitrogen dioxide on crop growth. Sci. Adv. 8, eabm9909 (2022).

    Article  Google Scholar 

  36. Rodriquez, M. & Zeise, L. CalEnviroScreen 3.0 Report (California EPA & Office of Environmental Health Hazard Assessment, 2017).

  37. Final Regulation Order: California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms (CARB, 2018); https://ww3.arb.ca.gov/regact/2018/capandtrade18/ct18fro.pdf?_ga=2.258682314.1729598153.1606172336-1333792675.1605911480

  38. Oil Severance Tax States (Virginia Department of Taxation, 2020); https://www.tax.virginia.gov/sites/default/files/inline-files/Oil%20Severance%20Tax%20States%20Matrix.pdf

  39. Basic Information about Oil and Natural Gas Air Pollution Standards (US EPA, 2022); https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/basic-information-about-oil-and-natural-gas#:~:text=In%20addition%20to%20helping%20form,and%20other%20serious%20health%20effects

  40. Monasterolo, I. & Raberto, M. The impact of phasing out fossil fuel subsidies on the low-carbon transition. Energy Policy 124, 355–370 (2019).

    Article  Google Scholar 

  41. Erickson, P., Lazarus, M. & Piggot, G. Limiting fossil fuel production as the next big step in climate policy. Nat. Clim. Change 8, 1037–2043 (2018).

    Article  Google Scholar 

  42. Felder, S. & Rutherford, T. F. Unilateral CO2 reductions and carbon leakage: the consequences of international trade in oil and basic materials. J. Environ. Econ. Manage. 25, 162–176 (1993).

    Article  Google Scholar 

  43. Sinn, H.-W. Public policies against global warming: a supply side approach. Int. Tax Public Finance 15, 360–394 (2008).

    Article  Google Scholar 

  44. Ericson, S. J., Kaffine, D. T. & Maniloff, P. Costs of increasing oil and gas setbacks are initially modest but rise sharply. Energy Policy 146, 111749 (2020).

    Article  Google Scholar 

  45. Elkind, E. N. & Lamm, T. Legal Grounds: Law and Policy Options to Facilitate a Phase-Out of Fossil Fuel Production in California (Berkeley Center for Law, Energy and the Environment, 2020); https://www.law.berkeley.edu/wp-content/uploads/2020/04/Legal-Grounds.pdf

  46. 2020 Annual Auction Reserve Price Notice (CARB, 2019).

  47. Geologic Energy Management Division. GIS Mapping. California Department of Conservation https://www.conservation.ca.gov/calgem/maps (2020).

  48. EIA Production Decline Curve Analysis (EIA, 2020); https://www.eia.gov/analysis/drilling/curve_analysis/

  49. Anderson, S. T., Kellogg, R. & Salant, S. W. Hotelling under pressure. J. Polit. Econ. 126, 984–1026 (2018).

    Article  Google Scholar 

  50. Muehlenbachs, L. A dynamic model of cleanup: estimating sunk costs in oil and gas production. Int. Econ. Rev. 56, 155–185 (2015).

    Article  MATH  Google Scholar 

  51. El-Houjeiri, H. M., Masnadi, M. S., Vafi, K., Duffy, J. & Brandt, A. R. Oil Production Greenhouse Gas Emissions Estimator OPGEE v2.0 (2017); https://eao.stanford.edu/research-project/opgee-oil-production-greenhouse-gas-emissions-estimator

  52. Duffy, J. Staff Report: Calculating Carbon Intensity Values of Crude Oil Supplied to California Refineries (CARB, 2015); https://ww3.arb.ca.gov/fuels/lcfs/peerreview/050515staffreport_opgee.pdf

  53. Jaramillo, P. & Muller, N. Z. Air pollution emissions and damages from energy production in the U.S.: 2002–2011. Energy Policy 90, 202–211 (2016).

    Article  Google Scholar 

  54. Gonzalez, D. J. et al. Upstream oil and gas production and ambient air pollution in California. Sci. Total Environ. 806, 150298 (2022).

    Article  Google Scholar 

  55. Goodkind, A. L., Tessum, C. W., Coggins, J. S., Hill, J. D. & Marshall, J. D. Fine-scale damage estimates of particulate matter air pollution reveal opportunities for location-specific mitigation of emissions. Proc. Natl Acad. Sci. USA 116, 8775–8780 (2019).

    Article  Google Scholar 

  56. Sacks, J. D. et al. The environmental Benefits Mapping and Analysis Program—Community Edition (BenMAP-CE): a tool to estimate the health and economic benefits of reducing air pollution. Environ. Modell. Software 104, 118–129 (2018).

    Article  Google Scholar 

  57. Estimating the Health Benefits Associated with Reductions in PM and NOx Emissions (CARB, 2019); https://ww2.arb.ca.gov/sites/default/files/2019-08/Estimating%20the%20Health%20Benefits%20Associated%20with%20Reductions%20in%20PM%20and%20NOX%20Emissions%20-%20Detailed%20Description_0.pdf

  58. Shapiro, J. S. & Walker, R. Is Air Pollution Regulation Too Stringent? Working Paper 28199 (National Bureau of Economic Research, 2020); https://www.nber.org/papers/w28199

  59. Krewski, D. et al. Extended follow-up and spatial analysis of the American Cancer Society study linking particulate air pollution and mortality. Res. Rep. 140, 5–114 (2009).

    Google Scholar 

  60. Mortality Risk Valuation (US EPA, 2014); https://www.epa.gov/environmental-economics/mortality-risk-valuation

  61. Clouse, C. IMPLAN to FTE & Income Conversions (IMPLAN Group, 2019); http://implanhelp.zendesk.com/hc/en-us/articles/115002782053

  62. Clouse, C. Understanding Labor Income (LI), Employee Compensation (EC), and Proprietor Income (PI) (IMPLAN Group, 2020); https://implanhelp.zendesk.com/hc/en-us/articles/360024509374-Understanding-Labor-Income-LI-Employee-Compensation-EC-and-Proprietor-Income-PI-

  63. California Communities Environmental Health Screening Tool (CalEnviroScreen 3.0) (California OEHHA, 2018); https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-30

Download references

Acknowledgements

We thank the state of California for supporting this work through the Greenhouse Gas Reduction Fund. The state of California assumes no liability for the contents or use of this study. The study does not reflect the official views or policies of the state of California. We also thank the California Environmental Protection Agency, California State Transportation Agency, California Air Resources Board, California Energy Commission, California Natural Resources Agency, California Workforce Development Board, California Department of Conservation, California Governor’s Office of Business and Economic Development, California Office of Environmental Health Hazard Assessment and Office of Planning and Research and the California Governor’s Office of Planning and Research for providing support, data and valuable feedback. We thank M. Clemence and E. O’Reilly for managing and supporting the project.

Author information

Author notes

  1. These authors contributed equally: Ranjit Deshmukh, Paige Weber, Kyle Meng.

Authors and Affiliations

  1. Bren School of Environmental Science and Management, University of California Santa Barbara, Santa Barbara, CA, USA

    Ranjit Deshmukh, Tia Kordell, Ruiwen Lee, Tracey Mangin, Sandy Sum, Vincent Thivierge & Kyle C. Meng

  2. Environmental Markets Lab (emLab), University of California Santa Barbara, Santa Barbara, CA, USA

    Ranjit Deshmukh, Paige Weber, Olivier Deschenes, Danae Hernandez-Cortes, Tia Kordell, Ruiwen Lee, Christopher Malloy, Tracey Mangin, Measrainsey Meng, Sandy Sum, Vincent Thivierge, Anagha Uppal & Kyle C. Meng

  3. Environmental Studies Department, University of California Santa Barbara, Santa Barbara, CA, USA

    Ranjit Deshmukh & Measrainsey Meng

  4. Department of Economics, University of North Carolina, Chapel Hill, NC, USA

    Paige Weber

  5. Department of Economics, University of California Santa Barbara, Santa Barbara, CA, USA

    Olivier Deschenes, Christopher Malloy & Kyle C. Meng

  6. National Bureau of Economic Research, Cambridge, MA, USA

    Olivier Deschenes & Kyle C. Meng

  7. School for the Future of Innovation in Society, Arizona State University, Tempe, AZ, USA

    Danae Hernandez-Cortes

  8. School of Sustainability, Arizona State University, Tempe, AZ, USA

    Danae Hernandez-Cortes

  9. Marine Science Institute, University of California Santa Barbara, Santa Barbara, CA, USA

    Tia Kordell, Ruiwen Lee, Tracey Mangin & Measrainsey Meng

  10. Department of Geography, University of California Santa Barbara, Santa Barbara, CA, USA

    Anagha Uppal

  11. Department of Earth Science, University of California Santa Barbara, Santa Barbara, CA, USA

    David W. Lea

Authors
  1. Ranjit Deshmukh
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Paige Weber
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Olivier Deschenes
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Danae Hernandez-Cortes
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Tia Kordell
    View author publications

    You can also search for this author in PubMed Google Scholar

  6. Ruiwen Lee
    View author publications

    You can also search for this author in PubMed Google Scholar

  7. Christopher Malloy
    View author publications

    You can also search for this author in PubMed Google Scholar

  8. Tracey Mangin
    View author publications

    You can also search for this author in PubMed Google Scholar

  9. Measrainsey Meng
    View author publications

    You can also search for this author in PubMed Google Scholar

  10. Sandy Sum
    View author publications

    You can also search for this author in PubMed Google Scholar

  11. Vincent Thivierge
    View author publications

    You can also search for this author in PubMed Google Scholar

  12. Anagha Uppal
    View author publications

    You can also search for this author in PubMed Google Scholar

  13. David W. Lea
    View author publications

    You can also search for this author in PubMed Google Scholar

  14. Kyle C. Meng
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

R.D., P.W., K.C.M., O.D. and D.W.L. conceptualized the study and acquired the funding. R.D., P.W., K.C.M., O.D., D.H.-C., R.L., C.M., T.M., M.M. and V.T. developed the methodology and software. R.D., P.W., K.C.M., O.D., D.H.-C., R.L., C.M., T.M., M.M., S.S., V.T. and A.U. conducted the formal analysis. D.H.-C., R.L., C.M., T.M., M.M., S.S., V.T. and A.U. curated the data. R.D., P.W., K.C.M., O.D., D.W.L., D.H.-C., T.K., R.L., C.M., T.M., M.M. and V.T. wrote and edited the paper. K.C.M., O.D., D.W.L., P.W. and R.D. supervised the project.

Corresponding authors

Correspondence to Ranjit Deshmukh, Paige Weber or Kyle C. Meng.

Ethics declarations

Competing interests

The authors declare no competing interests.

Peer review

Peer review information

Nature Energy thanks Peter Maniloff, Erin Mayfield and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

Additional information

Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Supplementary information

Supplementary Information

Supplementary Notes 1–19, Tables 1–4 and Figs. 1–37.

Source data

Source Data Fig. 1

Source data.

Source Data Fig. 2

Source data.

Source Data Fig. 3

Source data.

Source Data Fig. 4

Source data.

Source Data Fig. 5

Source data.

Source Data Fig. 6

Source data.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Deshmukh, R., Weber, P., Deschenes, O. et al. Equitable low-carbon transition pathways for California’s oil extraction. Nat Energy 8, 597–609 (2023). https://doi.org/10.1038/s41560-023-01259-y

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/s41560-023-01259-y

Search

Advanced search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing