Episode Transcript

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Ericka Cruz Guevarra: [00:01:00] I’m Ericka Cruz Guevara and welcome to The Bay, local news to keep you rooted. The city of Benicia has been thinking a lot about its future lately. With fewer than 30,000 residents, this 15.7-square-mile town along the Carquinez Strait has been shaped for decades by the Valero oil refinery, which propped up the local economy, employed hundreds of workers and contributed taxes that paid roughly 10% of the city’s budget. But last month, Valero officially stopped refining crude oil in Benicia. Now, city leaders hope Benicia can be the shining example of a so-called just transition, away from fossil fuels to renewable energy.

Mario Giuliani: [00:01:59] There are eight other communities in California that are home to a refinery, and it’s only a matter of when those communities are gonna have to go through what Benicia’s going through.

Ericka Cruz Guevarra: [00:02:12] Today, how Benicia is planning for a future without a refinery and why it’s easier said than done.

Ericka Cruz Guevarra: [00:02:26] So Julie, as I understand it, some people have referred to Benicia as a potential poster child for what a quote unquote just transition could look like. First, what is a just transition for those who don’t know what that is? And when did you first hear that in reference to Benicia?

Julie Small: [00:02:49] There’s a lot of definitions for just transition.

Ericka Cruz Guevarra: [00:02:52] Julie Small is a reporter for KQED.

Julie Small: [00:02:55] In this case, a just transition is a city moving off its reliance on a fossil fuel industry in such a way that increases the healthiness of the community and the overall standard of living for the community. And it does so in such way that the economy is sustained and diversified and reinvested into clean renewable energies and industries. The first time I heard that term being applied to Benicia was at this February town hall meeting. A hundred people packed into the city library to hear from the city manager, Mario Giuliani.

Mario Giuliani: [00:03:43] We have a great responsibility and honor to be the model community on how we transition

Julie Small: [00:03:52] He told them, you know, this is the plan for how we’re gonna make up for Valero’s departure. We are going to become that poster child for a just transition.

Mario Giuliani: [00:04:02] How do you protect a community that is home to a refinery? And so you don’t decimate that community, but you allow them to springboard to something else. And I think that we’re well positioned to kind of write that playbook

Ericka Cruz Guevarra: [00:04:19] Big words there from the city manager. And also I feel like a really big task, right? Because for context, Benicia’s, as I understand it, entire local economy and city budget relies very heavily on Valero, right? 

Julie Small: [00:04:37] I mean, we’re talking about 10% of the tax revenue that the city collects comes from the Valero refinery. And then there’s all the other industries in the area that build parts or provide services to the refineries. It’s also all the people in town, the restaurants, services leaning heavily on that income.

Ericka Cruz Guevarra: [00:05:02] Can you actually remind us, Julie, why Valero is leaving Benicia in the first place?

Julie Small: [00:05:08] The company says it’s leaving because demand for fossil fuel in California is declining, you know, with the rise of renewables and we’re, you know phasing out fossil fuel cars. We’re switching to electrical vehicles. At the same time, regulations on the oil industry are increasing in California as we’re trying to get a handle on controlling emissions and also controlling gas prices. Valero’s CEO has publicly complained about some recent bills that were passed in response to gas price spikes that would have penalized oil companies if they make excessive profits. You know, it’s important to emphasize that although Valero says that’s why they’re leaving, it is part of a trend we’re seeing across the country. Refineries are closing everywhere, so it’s not just unique to California, it not just because we have all these regulations. It’s that these are huge multinational global conglomerates that are maximizing their profit. If they can move their operations overseas where the labor’s cheaper and they have more demand, they’re gonna do it.

Ericka Cruz Guevarra: [00:06:22] As I guess Benicia’s preparing for Valero to leave, I imagine there’s been a lot of thinking and talking about what the city would look like without it. So what could a just transition look like in a town like Benicia?

Julie Small: [00:06:39] Well, they definitely want Venetia to be a cleaner town. They don’t want to have new industries come in that are polluting. So they’re looking to get away from this cycle of having to deal with emissions over decades and high asthma rates and high breast cancer rates. So looking for industries that, one, will diversify the economy, so they’re not so dependent on one big company, but also We’ll change the focus. We’ll be actually contributing to California’s goals to become carbon neutral.

Kari Bridseye: [00:07:12] We’re in a very precarious moment right now, but I’m filled with hope because of what we have here.

Julie Small: [00:07:20] I talked to Kari Birdseye, city council member at Benicia, and she’s actually by trade an environmental scientist.

Kari Bridseye: [00:07:28] Anybody that knows me knows that I always talk about the opportunity for the Port of Benicia being involved in standing up the offshore wind industry in California.

Julie Small: [00:07:41] So she’s really excited about the fact that the port in Benicia that is currently used by Valero to export pet coke, which is a byproduct of refining and polluting substance, using that instead as a place where you could manufacture and export parts for the nascent offshore wind industry in California.

Kari Bridseye: [00:08:05] And to me, that’s the perfect scenario for a just transition away from fossil fuels. Let’s be part of the solution instead of the problem.

Ericka Cruz Guevarra: [00:08:16] There’s also this question in the city about what to do with the land that the refinery is on as well, right? I mean, it covers like a huge swath of the city.

Julie Small: [00:08:27] Yeah, 900 acres of prime land right there overlooking the Carquinez Strait. It’s beautiful area. It is going to take a while before that land is usable. There’s a buffer zone around the refinery, it’s about 500 acres, that they’re hoping could be redeveloped sooner because it’s not as contaminated as the refineries site itself. They’d like to see that become, you know, housing or businesses that are catering to the local economy. Valero has actually hired a company to repurpose the land, redevelop the land for them. Those proposals are coming in the fall, so we don’t know exactly what that’s gonna be, but there’s a lot you could do with that land. And council member Kari Birdseye talks about this.

Kari Bridseye: [00:09:23] Centrally located, we have two interstates, a rail line, a port. We have so much potential here and it’s my vision to have a very diverse set of businesses and developers come in and be part of our community on the 900 acres that Valero owns right now.

Ericka Cruz Guevarra: [00:09:53] Coming up, why Valero’s departure from Benicia is more complicated than it sounds. Stay with us.

Ericka Cruz Guevarra: [00:11:07] It does seem like there is a lot of planning and daydreaming about what that future could look like in Benicia. So when exactly is the Valero refinery closing?

Julie Small: [00:11:20] That’s unclear at this moment. They’ve stopped refining. There’s nothing coming out of those stacks. But because of the global fuel crisis and California’s own problem of tightening supply between Valero and the Phillips 66 refinery in Southern California that closed last year, California lost 20% of the fuel that’s refined in the state. So California is looking to make that up. As soon as Valero said they were gonna leave, Governor Newsom, the California Energy Commission did everything they could to get Valero to stay. They couldn’t convince them to keep refining, but they did get them to agree to use their facilities to import refined fuels, store it, and then disperse it, using their pipes to get it to other parts of the state. In a community meeting, the Valero refinery manager said they thinks they probably won’t be there longer than two years, but that was like the only indication of a timeframe.

Ericka Cruz Guevarra: [00:12:33] It sounds like parts of the refinery are still being used because of the fact that we still, as a state and a country and I guess a world, still rely very heavily on oil and gas and that this is sort of being also pushed by this global fuel crisis that you’re just talking about. But what does that mean for Benicia? What does that means for the city’s ability to really plan for its future? 

Julie Small: [00:13:03] It makes it very difficult for them to plan. I mean, that’s all they can do at this point is say, well, let’s start planning. Let’s get investors in here. Let’s clean it up. There’s things they can now, like trying to figure out how much it’s gonna cost to clean it. But it really delays their ability to move forward with redevelopment, which is a big part of their financial plan. Having Valero stay in this capacity where they’re not refining. They’re not going to be paying the kind of taxes they were. They’re going to pay some small. So they’re not gonna be offering the benefit they used to, but they’re also gonna be kind of preventing the city from moving forward. And people there are understandably very concerned about that.

Christina Gilpin Hayes: [00:13:50] You know, it’s a catch-22. We might be better off, you know, environmentally, but not so much better off fiscally.

Julie Small: [00:13:57] And I talked to Christina Gilpin Hayes, she’s a resident, but she also serves on the city’s planning commission. She wasn’t like effusive, some people were really excited that Valera was leaving. She wasn’t one of those people. She’s like, look, we knew this was coming. And unfortunately, by them staying on like this, it really hamstrings the city.

Christina Gilpin Hayes: [00:14:17] It just prolongs what we need to happen, you know, either go or don’t, but if you continue to use it as a storage facility, it eliminates the ability for the city to move forward.

Ericka Cruz Guevarra: [00:14:34] That’s not even to mention that all of this redevelopment will require a lot of money, I imagine. And we talked at the top about how California more broadly is sort of leading the way and transitioning away from oil and gas and that Benicia isn’t the first city to even try and do it, but it still seems like it’s easier said than done. So what help does exist for cities that are making this transition, Julie?

Julie Small: [00:15:07] Well, one thing that the state has done, we’ll start with the positives, is that they have created this displaced oil and gas worker fund, which basically helps these workers that are being laid off at Valero transition into jobs that match their skill, their expertise, and also offer comparable wages in other industries. They’re also offering $25,000 grants to small businesses affected by the closure of Valero. That’s kind of what’s at the state level. Locally, there’s a lot more. One of the big things that Benicia is hoping to lean on is the Bay Area Air District. Our air regulator has started a new program. It’s taking fines against polluters like Valero and reinvesting those fines back into communities that were affected by emissions. They find Valero 82 million in 2024 for over a decade of excess emissions. And they’re making… 60 million of that available to Benicia and surrounding communities. Benicia’s not sure how much of that money they’re going to get awarded and they won’t know until the fall but they’re hoping to use that money to keep the city government afloat and keep services for the community consistent so that they can handle this transition and they’re pretty confident they’re gonna get a lot of support from the Air District.

[00:16:29] Is it enough for cities and towns like Benicia? Like, how do Benicia residents and officials feel about the support that’s coming from the state and air regulators?

Julie Small: [00:16:40] I think they feel pretty positive about what’s coming from the air regulators. At the state level, you know, they could use a lot more support.

Josh Sonnenfeld: [00:16:49] There’s a lot more that we can and should be doing at the same time.

Julie Small: [00:16:52] I talked to Josh Sonnenfeld with the UC Berkeley Labor Center, and he says most of the emphasis has been on how to show up the fuel supply and not nearly enough on how do we help these refinery towns actually transition.

Josh Sonnenfeld: [00:17:09] For example, California is one of the biggest markets for clean energy products, right? Whether that’s solar panels, EVs, heat pumps. And we have an opportunity to actually build these products in California as well. And so how can we make sure that the inequities of the past century of putting low-income housing and people of color and immigrants next to refineries. That we’re actually undoing some of that damage with the new economy that we are trying to build.

Julie Small: [00:17:41] He says, you know, the state should be doing both. They should be making sure that the fuel supply stays stable, but they could also be helping refinery towns by establishing a state office to facilitate and guide economic transitions, like which other states have done. And also he cited New York State, for example, created something called a tax revenue stabilization fund. It’s basically cash that the state provides to a refinery town to cope with the sudden drop and tax revenues.

Josh Sonnenfeld: [00:18:11] There is opportunity for us to develop something similar in California. But the key is, do it in a way where we’re really, we really need the feedback of local communities about how they wanna transition their economy.

Julie Small: [00:18:24] From my vantage point, I tried to find out what concretely they’re doing and I got just a lot of word salad. But, you know, other people in Benicia feel like they’re more involved in sort of the backroom discussions, feel that the state is with the town and will be helping more going forward.

Ericka Cruz Guevarra: [00:18:46] Well, what do you think, Julie, it will take for Benicia to, in fact, become the poster child of a just transition?

Julie Small: [00:18:55] It will take Valero’s departure, the final departure of Valero so that that land can be redeveloped. I really think that that’s the key to their future. I think it’s going to take more support from the state for displaced workers. And also just like Benicia on its own cannot create a new green economy. There’s a lot of effort regionally to create like these green economic zones, manufacturing zones for the green industry. It’s going take programs like that to provide a new identity for Benicia, a new economy. It takes ten years to decontaminate. Refinery site, according to state officials, you know, whose job is it is to do that. And that’s like probably a conservative number.

Ericka Cruz Guevarra: [00:19:44] What’s your sense of how city leaders are feeling in Benicia? You think they’re hopeful about their future?

Julie Small: [00:19:51] They are hopeful. I mean, it’s a really great community and it’s really politically active community. I mean in 2016, Valero wanted to bring in oil by rail and that really galvanized people. You know, I left that town hall feeling like a lot of other people probably did, which was like, yes, they can do it. I’ve since become a little more like, wait a minute, you know, they’re relying on a lot of aspects here that are tenuous. But they’re very driven and they have a lot of know-how and a lot chutzpah. Well, you have eight other refinery towns that are gonna be facing this, and having a blueprint that works is gonna make a big difference for them.

Ericka Cruz Guevarra: [00:20:41] Well, Julie Small, thank you so much for joining me. I appreciate it.

Julie Small: [00:20:45] Thank you, Ericka.