The impact of COVID-19 on California’s green economy

The impact of COVID-19 on California’s green economy

By: Dennis Rodriguez, Head of External Affairs, Western U.S., Siemens USA

My 17 years entrenched in Los Angeles infrastructure and local government have given me a front row seat to California becoming the most progressive state related to the green economy. This is the result of a combination of policy and projects about sustainable and clean technologies such as renewable energy, power distribution, battery storage, and, of course, zero emission and electric vehicles.

    

The state’s bold approach does come at a price, however, as Californians shoulder some of the highest electric utility rates, fuel prices, rents and home prices, and taxes in the country. And as the global pandemic has produced reported losses in public dollars, I’ve wondered: Will the COVID-19 pandemic slow California’s march towards a greener economy?

 

While the crisis has had a noticeable cooling effect, I believe, for a number of reasons, that optimism and the will to lead in this market space will continue to drive the California green economy forward. 

 

    

 

 

Both global and national green economy trends continue to show signs of growth. Globally, analysts have differed, but many believe that the global growth outlook for clean technologies and renewables generally remains intact. This applies even if stimulus plans prioritize employment and direct economic support measures over green growth, especially in emerging markets. In terms of the global energy economy, investments could shrink 20 percent by the end of the year, according to the International Energy Agency. But again, this represents a temporary cooling effect, not a collapse.

 

Next, the results of the November election are highly relevant. The green economy has continued to grow during the Trump Administration, and Biden Administration policies could accelerate it. Yet the main drivers of the U.S. green economy continue to be individual state mandates, tax incentives, and corporate initiatives, such as Siemens’ commitment to be carbon neutral by 2030. And, as it happens, there’s pent-up green growth legislative action in California itself. 

 

Like many other states, California state legislators were forced to take an unprecedented mid-spring, two-month pause to their legislation session when Governor Gavin Newsom declared a state-wide stay-at-home order. Upon their return to the state capitol in May, they faced the daunting task of a shrunken budget. They set aside legislative bills that did not immediately address the state’s most pressing issues. Thus, a few significant green economy bills were paused, including the launching of California’s Green New Deal, which would have built on existing climate change policies to accelerate the state’s decarbonization.

 

Despite this delay, State regulators and policymakers continue to advance the state’s green agenda. The California Energy Commission (CEC), which regulates California’s energy sector, envisions long-duration storage as a key to stabilize the grid and deliver on the state’s decarbonization goals. Mary Nichols, Chair for the California Air Resources Board (CARB), said recently, “We're exploring a lot of ideas. . .[because] in a time when the economy is going to be very challenged for a few years while we come back from the COVID recession, we're going to have to be more creative.” 

 

And from the executive standpoint, Governor Newsom has continued to push the green agenda as he recently announced his executive order mandating all new car and light-duty truck sales must be zero emission vehicles (ZEV) by 2035. Thirteen states and the District of Columbia then followed California’s lead in setting stricter standards, meaning that the California rules, by some estimates, cover more than 40 percent of America’s population. 

 

All of these new green policies in California are set against the backdrop of the state’s most recent and record-setting wildfire season. This year alone, California has experienced wildfires burning close to 4 million acres, double the old record from two years ago. Part of the solution to this challenge is strengthening the electrical grid to reduce its wildfire risk.  

 

So, ultimately, California’s green-economy agenda is not just about pursuing sustainability—it’s about addressing the climate change already well underway. Green economies also are more resilient economies. And in California, both the public and the private sector will need to build this future together. Which is why Siemens will continue to be a thought leader and innovator in this market space.

 

Siemens employs approximately 5,000 employees in California, many of those people working at our North America Rail Rolling Stock headquarters in Sacramento. Clean energy, zero-emission vehicles, and renewables continue to be prioritized as part of our mission to be an asset to the state

 

Indeed, our work will be part of the long-term perspective that shows continued growth in the state’s green economy. And Siemens looks forward to supporting this opportunity to build a more sustainable future, demonstrating the potential to spark innovation, support good-paying careers and strengthen economies along the way. 

 

Published: November 17, 2020