The California Public Utilities Commission has rejected a project proposed by Pacific Gas and Electric to convert wood biomass to natural gas, finding that the company had failed to demonstrate that it would reduce greenhouse gas emissions and benefit ratepayers.
The utility did not account for fugitive methane emissions from the transmission, storage, distribution and production of biomethane at the project site, the commission found. PG&E also did not account for the GHG emissions caused by transporting biomass to the project site.
PG&E had proposed adding a methanation system to Woodland-based West Biofuels’ existing gasification facility in Burney as part of the CPUC’s renewable natural gas rulemaking, issued in February 2022. Each utility in the state was required to propose at least one woody biomass gasification pilot project as part of the commission’s effort to procure 18 Bcf of biomethane by this year and 73 Bcf by 2030. (See California PUC Sets Biomethane Targets.)
The commission had directed PG&E to set aside $16.936 million in revenue from the state’s cap-and-trade program to fund the project. But the commission found that, along with not properly estimating the GHG reductions from the project, “no analysis has been provided by PG&E to demonstrate the estimated benefits to ratepayers from the project in concrete terms.”
“Our growing understanding of California’s affordability crisis has heightened our scrutiny of programs that add costs to ratepayer bills,” Commissioner John Reynolds, who was assigned the proceeding, said at the CPUC’s voting meeting May 15. “I am wary of continuing to add programs that place substantial above-market costs on ratepayers for initiatives primarily aimed at achieving broader societal or global benefits with the expectation that ratepayers will pay for those broader societal and global benefits.”
Over recent decades, California ratepayers have been asked to fund numerous climate and policy initiatives through their energy bills, Reynolds added. This approach has proven “regressive … and has contributed significantly to our current affordability crisis,” he said.
Reynolds recognized that many of the investments in climate policies and programs have produced real societal benefits that have been important for society at large. “But it is increasingly important that we be very careful about which programs we fund on ratepayer bills,” he said.
The commission’s Public Advocates Office had protested the application, arguing that PG&E has “not demonstrated that the project will be able to offset emissions from the commercial hydrogen used in the methanation process, 95% of which produced in the United States involves the use of fossil fuels.” The Center for Biological Diversity and the Sierra Club also jointly protested.
The CPUC directed PG&E to return the cap-and-trade revenue it had set aside to ratepayers.
