 Hello. My name is Diane Grunick. I am a pre-court energy scholar with the pre-court Institute for Energy and an affiliated scholar with the Bill Lane Center for the American West, both at Stanford University. I was a California policymaker for six years as a commissioner with the California Public Utilities Commission. I have been involved with California and Western energy issues and policymaking for over 40 years. This lecture is the fifth in a series of lectures I have helped develop for Stanford University on California and Western energy. This talk covers five topics. What is policy and who makes it? California climate goals and strategies, California clean energy goals and strategies, achievements, challenges, and innovation opportunities, and finally some closing thoughts. Let me start with the first topic. A key question I am often asked is, what do we mean by policy? The answer is actually simple. Policy refers to government actions. Government makes policy through passage of laws, adoption of regulations, issuance of executive orders, etc. Government also implements policies, but it usually involves a wide range of non-governmental players in the implementation. Government at all levels, international, national, state, provincial, local, makes policy. Policy programs can be long-term ones, like Medicare or Social Security, but they can also be shorter ones, like grants to help wildfire victims or localized efforts, like New York City's new congestion traffic fees. So which US governmental organizations are key for creation of energy policies? At the federal level, it is the President, Congress, and primarily three governmental agencies, the Department of Energy, the Federal Energy Regulatory Commission, and the Environmental Protection Agency. At the state level in the US, it is governors, legislators, and traditionally two state agencies, Public Utilities Commission, on which I sat as commissioner for the state of California, and state energy offices. But because energy is intertwined with many issues, climate, air quality, water, the environment, economic development, etc., many other state agencies are also increasingly involved in developing, funding, and implementing aspects of energy policy. And at the local level, it is city councils, as well as departments within government, such as planning departments. Non-governmental entities, private companies, utilities, environmental advocates, etc., cannot actually make policy, but they are critical for implementation, particularly in the energy sector. And many try to influence what policies are created, funded, and how they are structured. There are three major policy tools often referred to as carrots, sticks, and sermons. Carrots are the financial incentives, subsidies, and rebates. Examples are federal tax credits for electric vehicles, and utility customer rebates for high efficiency appliances. The second tool, sticks, are mandatory requirements, often with a financial penalty. Typical sticks are renewable portfolio standards enacted by most U.S. states that require energy sellers to have a certain percentage of renewable power in their portfolios, as well as state and local energy efficiency building codes. The third tool, called sermons, are informational. Labels like Energy Star or media campaigns promoting solar energy. These tools address the need to change behavior and create demand for new technologies and approaches. All levels of government use some combination of these tools, and the most successful policies and programs use all three in an integrated fashion, particularly where the goal is large-scale market transformation, like the change from gasoline power vehicles to fossil-free ones. There is another fact to understand about energy policy creation in the United States. The U.S. does not, unfortunately, have a national energy policy, though it does have hundreds of energy-related laws. Under the federal-state legal system, the states in the U.S. are free to set their own policies, absent a conflict with a federal law. As a result, most clean energy policies in the United States, such as renewable requirements, are set at the state level. States adopt their own laws and regulations for utilities operating within their borders. Hence, the state oversight of utilities has been a dominant policy mechanism for clean energy in the United States. But states can rely upon energy markets and the use of price signals, in addition to, or in lieu of, direct regulation and mandates. In the U.S., each state decides what approach it wants, vis-a-vis energy regulation, and use of competition and markets. This table shows the wide variety in the U.S. for both gas and electric. Some states, primarily in the West and Southeast, have traditional energy regulation, primarily through state utility commissions regulating vertically integrated utilities. But other states, notably Texas and the Northeast, have embraced regulated energy markets and deregulated energy services so that non-utilities compete to offer these services. And some, such as California, have a mixture. And, even where states have deregulated their energy utility structures, they still generally have adopted policies that apply to energy providers in their states. I will now turn to my second topic, California Climate Goals and Strategies. I start with climate rather than energy, because in California, climate policy is the paramount driver of energy policy, and energy policy is used to support and complement climate goals and policies. If you watched my first lecture in this series, California and Western Energy, Introduction and Agency Overview, you should recognize the pie chart on the left. It shows California's greenhouse gas emissions by economic sector for 2016, using the emission inventory published by the California Air Resources Board. The chart does not include emissions from what in California are called natural and working lands, which includes carbon in forests, grasses and scrublands. As the California wildfires have shown, if this natural vegetation burns, huge amounts of greenhouse gases can be released. California's 2018 wildfires emitted as much CO2 as its electricity generation did for the entire state in a year. On the right, I have pulled out emissions for three key areas that involve the energy sector. These are electricity production, accounting for about 16%. The number is significant, but the state's focus on renewables and carbon-free sources is reducing these emissions significantly. The second area key to energy is the transportation sector, the source of over 41% of California greenhouse gas emissions, and when emissions from refineries are included, almost 50% of emissions. Not surprisingly, there is a tremendous focus in California on reducing transportation greenhouse gas emissions. And finally, emissions produced in buildings is another significant source, about 25%. I'll discuss later California's developing policies and programs to decarbonize buildings. Taken together, these three areas account for over 90% of California's greenhouse gas emissions, which explains why energy policies and the agencies involved in developing, implementing, and enforcing them have such a critical role in California's climate efforts. This slide, prepared by the California Energy Commission, lists California key laws and policies for reducing greenhouse gas emissions, and shows in the chart on the right the progress to date, but also the daunting challenge ahead. In 2006, California enacted its first major law on greenhouse gas emission reduction, AB 32, setting a goal to reduce greenhouse gas emissions to 1990 levels by 2020. I want to emphasize that this goal, like all the goals listed here, is economy-wide. In other words, total emissions listed on the prior slide across all economic sectors, electricity, transportation, industry, buildings, etc., are to return to 1990 levels by 2020. In 2015, California passed its second landmark climate law, SB 32. AB 32, the first law, set California's climate goal for 2020. SB 32 looks out 10 years further and sets the state's goal for 2030, limiting greenhouse gas emissions to 40% below 1990 levels. But at the same time, both Governor Schwarzenegger in 2005 and Jerry Brown 10 years later in 2015 looked to the long-term and set as a goal, though not a binding law, a commitment that matches international climate goals to reduce California's greenhouse gas emissions to 80% below 1990 levels by 2050. And finally, last year, Governor Brown signed an executive order that calls upon California to be carbon-neutral, economy-wide by 2045, and to achieve and maintain net-negative emissions thereafter. Reaching carbon neutrality by 2045 is consistent with international agreements to reduce emissions to levels that can avoid catastrophic climate change impacts. Collectively, California's laws and policies are the most comprehensive and aggressive goals anywhere in the United States and probably worldwide for reducing carbon emissions. Are they achievable? If so, at what cost? What changes are needed in both California's economy and its way of life? These are issues I will touch upon, at least for the energy components in the later sections of this lecture. This slide comes from the consulting firm E3, which is the principal modeling consultant to the California Air Resources Board and other California agencies on climate and energy issues. It shows what E3 calls the four pillars of decarbonization and depicts the multitude of areas that California and many other governments are addressing for what we call deep decarbonization across the entire economy. There are four critical components, energy efficiency and conservation, electrification, low-carbon fuels, and reducing non-energy, non-CO2 greenhouse gas emissions. E3, through its modeling analysis, has identified in this slide the many aspects of greenhouse gases that must be addressed under each of these four pillars. As you can imagine, there are many approaches government can take to reducing greenhouse gas emissions. California law specifies that the state's air agency, CARB, is responsible for determining and adopting the state's climate framework. CARB does so in a public document known as the scoping plan, most recently updated in 2017. CARB is doing another update now on expanded programs to achieve the 2030 greenhouse gas emission reduction targets. The basic framework uses what CARB calls complementary standards, e.g. regulatory mandates or STICS, to achieve the vast majority of emission reductions, about 70% right now. These mandates are adopted by CARB and by other agencies, particularly the CPUC and the CEC. The remaining emissions are addressed through California's cap and trade system, which sets price on carbon and then allocates allowances that decrease over time to industry. The allowances allocated assume reductions forecast through the mandated complementary policies allocated to the responsible party, and thus the complementary policies and cap and trade work hand in hand to achieve the necessary emission reductions. Cap and trade is not a carbon tax, but functions in much the same way in that it relies upon price signals, and in California the allowances are sold with the proceeds going to fund climate research and a host of greenhouse gas emission reduction efforts. Cap and trade is a dual policy design of source. The cap is a STIC, and the trade creates a revenue mechanism to offer carrots, called the Greenhouse Gas Revenue Fund, or GG-RF. Given that greenhouse gas emissions occur throughout the California economy, and that California's climate laws mandate reductions that are economy-wide, California's strategy is to adopt regulations, goals, programs, incentives, e.g., all three policy tools of carrots, sticks, and sermons in all areas. Of particular note is the increasing focus in California on low-income and disadvantaged communities who are disproportionately affected by energy in other facilities, in areas where they live and work with poor air quality and less ability to pay for many of the clean energy climate options being developed. I discuss more on this topic later. California's efforts on energy efficiency and renewables have been, in large part, easy steps compared to the efforts needed to achieve the emission reductions targeted over the next 30 years. While I believe the state's climate goals are achievable, they will be difficult and costly and will require significant changes in the structure of California's economy as well as lifestyle and behavior. One last note is that California generally attempts to be technology agnostic in its policies. But this neutral approach may be in tension with meeting climate goals at the maximum speed technologically possible. As a result, California has developed in some areas a policy approach that calls least cost best fit that considers factors beyond cost and examines scale and speed. California has enacted many laws to address climate beyond the major ones I've mentioned, AB 32 and SB 32. This slide covers some of the key laws and programs. You can see they cover all aspects of California's greenhouse gas emissions and its economy. Of particular note is the low carbon fuel standard, which reduces the carbon intensity of fuels used in California. Standards are set for both gasoline, gasoline substitutes such as ethanol, electricity and hydrogen, and also for diesel and diesel substitutes, including biodiesel and renewable natural gas, e.g. biomethane. Carb has extensive regulations in this area and it continues to be a source of controversy. Research has shown that more energy goes into making and delivering ethanol than the energy it produces when used in a car. California is also focused on managing rangelands, forests and wetlands so they can store carbon. And of course, how wildfires can be minimized to avoid greenhouse gas emissions from fires. I've been talking about California's climate goals, so let me now focus on its clean energy goals and programs. California has dozens of laws and policies dealing with clean energy. However, those of you non-emerged in the details, I suggest thinking about the top eight, which I've listed here. Five are laws, two are executive orders, and the eighth is a regulation adopted by the California Energy Commission. Taken together, these provide the clean energy policy framework for California. Let me review them briefly. The first is to double energy efficiency savings by 2030, an effort being overseen by the California Energy Commission with significant input from the California Public Utilities Commission. The second is to change the focus of energy plans and investments to that of achieving the state's climate goals. This refocus is a major task since California now has almost 100 entities, utilities, community choice aggregators and others buying and selling electricity to the residents, industries and businesses in the state. Having sufficient accountability and transparency of plans and procurement decisions across all of these entities is proving to be a major challenge with significant risks starting to emerge. The third policy area is electricity. SB 100, passed in 2018, sets a goal of 100% carbon-free electricity by 2045, which, as you can imagine, has garnered international attention. The CPUC, CEC, and CARB must provide a joint report on progress by January 2021. And in the near term, California is now requiring that 50% of its electricity supply be renewable by 2025 and 60% by 2030. The fourth policy area is also related to the electricity grid, and these are the requirements for energy storage development to support the change in the grid towards intermittent resources. The fifth is also related to electricity, but at the local level where the CEC has focused the state's building standards on requiring solar panels on most new homes starting next year. The next two deal with transportation, both set as policy through executive orders issued by Governor Brown. The first is a goal of 5 million electric vehicles in California by 2030, and the second is to reduce petroleum-using cars and trucks by up to 50%. And finally, the eighth area is building decarbonization, in which the CPUC and CEC are now implementing two major new laws passed in 2018, which I will discuss later in this lecture. This slide from the CEC using CARB data shows the changes in greenhouse gas emissions from California's electricity sector for both in-state generation and imports from 2005 to 2016. As you may know, in California, we count greenhouse gas emissions from imports of electricity used in California as within our greenhouse gas emission goals. This chart also shows emissions against a baseline of 1990 levels versus 40% below 1990 levels. If you recall, SB100, passed in 2018, sets a target of 100% carbon-free electricity by 2045. So basically, all of the emissions shown on this chart must disappear within just over 25 years. Is this 2045 goal achievable? Well, this chart shows that in 15 years from 2001 to 2016, California went from greenhouse gas emissions of about 120 million metric CO2 equivalent tons to about 70 million metric tons, a reduction of 50 million metric tons. In theory, then, to reduce another 70 million metric tons to go to carbon-free electricity can be done in the almost 30 years between 2016 and 2015. However, operation of the grid, its reliability, and costs must also be taken into account. But as I'll explain later, there certainly is reason to be hopeful given the following costs of renewables. So let me add a few other caveats. One source of carbon-free electricity is nuclear power. PG&E is closing California's last nuclear power plant, Diablo Canyon. So California will need to add another 9% of carbon-free generation just to avoid emission increases. California will also need to plan for future drought years and increasing occurrence with climate change, which can also significantly decrease another carbon-free resource, hydroelectricity. Third, the big reductions shown on this chart came from reducing imports from coal-fired plants out of states. Many of these plants have been replaced with new natural gas plants. California's reliance on electricity from natural gas power plants, both in-state and out-of-state, has increased significantly from almost 10% in 2012 to 34% in 2017. Retirement of inefficient, costly, out-of-state coal plants is one thing. Retirement of new, efficient natural gas plants that provide inexpensive power to California is another thing. A source of continuing debate in California is how much the additional supply needed by the phase out of nuclear and coal and increased electrification and transportation in buildings will come from natural gas versus solely from renewables and hydroelectric generation. My personal answer is that new natural gas plants are probably not the right investment for California, since they will likely not be competitive in markets a decade from now or even earlier, and the investment will then become stranded costs, absent technology to ensure the gas plants have no emissions. There is increasing interest in natural gas produced from biomass and other sources, called renewable gas, but its role is currently small, and the policy, technology, and cost factors are challenges. But, at the same time, existing natural gas plants play a vital role in responding to the ramping of supply caused by the increased use of intermittent renewables. Cost-effective substitutes for gas plants on the scale needed for California is a challenge, particularly in terms of avoiding significant increases in the cost of electricity. California has long recognized the importance of technology development for reaching its clean energy and climate goals, and the need to fund R&D specifically. For over 30 years, Californians have paid a small charge in their electricity and natural gas utility bills to fund research and development. These charges currently raise over $150 million annually and are a critical component of California's clean energy efforts. The program is overseen by both the CEC and the CPUC. The third column in this slide is the Greenhouse Gas Revenue Fund, GGRF. The fund related to California's cap and trade system. GGRF has three broad categories, transportation and sustainable communities, clean energy and energy efficiency, and natural resources and waste diversion. These programs fund both traditional efficiency and clean energy programs, as well as the electrification of light and heavy-duty vehicles, biofuels, conservation and agricultural lands management, transit-oriented development including housing projects, and innovative approaches like whole community carbon reductions. To help address social inequity in California, California law requires that at least 25% of California's cap and trade funds go to projects within and benefiting disadvantaged communities, and at least an additional 10% is for low-income households or communities, but likely more is needed. Will we see new climate and energy laws this year? The information on this slide is current as of early April 2019. Given that the California legislative session is active until the end of summer, further developments will occur. But let me point out the critical areas of legislative interest. First and foremost is dealing with wildfires, other aspects of climate change such as flooding, PG&E's bankruptcy, its possible reorganization, and CPUC oversight. These issues are being simultaneously addressed in bankruptcy court, the CPUC, the Governor's Task Force on PG&E bankruptcy, and the Commission on Catastrophic Wildfire Cost and Recovery. These issues will certainly result in proposed legislative changes, and the legislature will thus be a key entity in setting new rules and programs around these collective areas. The second area to follow is the proposal for a California Clean Electricity Authority. As I mentioned earlier, there is increasing concern about the proliferation of entities doing electricity planning and procurement in California. This bill is a response to that concern. The authority will be tasked to increase the procurement of clean energy in the state and provide more transparency around California's electric supplies, including their reliability. Another bill of note would require CARB to develop a comprehensive strategy for medium and heavy-duty trucks in order to bring all of California into compliance with federal air quality standards and to meet California's greenhouse gas goals for 2030 and 2050. According to a 2018 report by the American Lung Association, seven of the 10 most polluted areas nationwide for both year-round and short-term particle pollution are in California. And finally, let me note key activities in other western states where state legislatures have bills for going carbon-free by 2050, as well as voluntary plans by utilities to be carbon-free. I'll now turn to the next segment of this lecture, Achievements, Challenges, and Innovation Opportunities. California has a remarkable history of success in achieving its clean energy goals. This slide about new refrigerators is one of my favorite stories because it shows through California's groundbreaking efforts in energy efficiency how technology and policy combine can lead to lower costs and better products for consumers in the environment. The energy use of refrigerators increased steadily in the United States from the 1940s up until 1975. Then, in 1975, the California Energy Commission introduced the first appliance standards ever and did so for refrigerators. Since then, California and the federal government have been able to tighten the efficiency of refrigerator standards on a regular basis due to better technology coming into the market and lower costs. But that is not the only story. The average refrigerator cost shown on this slide in green has fallen dramatically in the 35 years since standards were first set so that now consumers pay dramatically less for efficient refrigerators than they did for inefficient ones. And the final part of the story is that the size of refrigerators has increased steadily. It has leveled off only due to the size of doors in kitchens preventing bigger refrigerators from getting into those kitchens. And though not shown on this chart, the trend has continued. By 2013, the electricity used for the average new refrigerator in the U.S. had decreased to about three-quarters of its 1973 level. Even though refrigerators had increased in average size and decreased in inflation-adjusted prices. The story on renewables is similar. Over time, California has consistently achieved its renewable goals ahead of schedule, with California renewable generation going from 12 to 34 percent in just a 10-year period from 2008 to 2018. This slide, compiled by the U.S. Department of Energy in 2015, shows the national experience with the falling cost of clean energy technology. Again, it shows a great success story. It shows cost reductions since 2008, the cost of land-based wind, distributed photovoltaics, utility scale, PV, and battery components all fill rapidly in just a six-year period. And my favorite for LEDs, the story is truly dramatic, costs falling to about 10 percent of what they were six years earlier. If you recall, California's original climate goal, set in AB 32, it was to lower greenhouse gas emission levels to 1990 levels by 2020. The good news is that California is close to that goal. Emission reductions to meet this 2020 target have come primarily from the electric power sector, where renewable energy is now more than one-third of the state's electricity supply. And from transportation, due mostly to increasing fuel economy. So now, let's take a look at the challenge of meeting the state's new goals, 40 percent below 1990 levels by 2030, and 80 percent below by 2050, e.g. deep decarbonization. Earlier in this lecture, I summarized the greenhouse gas emissions in three areas relating to energy, electricity production, transportation, and buildings, which cumulatively account for over 90 percent of California greenhouse gas emissions. These three areas present major challenges, but also provide opportunity for significant innovation in terms of technology, cost, and policy. And there is a fourth area to think about, advancing social equity. Social inequity is a cause of slower market uptake in clean energy solutions. As an example, half of Californians either lack the power because they're renters, or because they don't have sufficient capital to make clean energy investment. An exogenous challenge to be sure, but a serious one. So let me start with the first challenge I want to highlight, the changing electricity grid. This slide comes from Southern California Edison in a lecture to the Stanford Energy Seminar in 2018. It shows the complexity of the evolving grid as it brings in more intermittent renewable resources, seeks to have greater use of storage, and implements automation and digitalization throughout the system. All of which pose both reliability and cost challenges. All of these infrastructure improvements, whether hardware or software, cost money, and our driving rate increases, as well as the necessity of replacing aging energy infrastructure. Our challenge is not only how to use the technology and policy to develop the new electricity system, but equally important how to contain cost impacts and ensure that all consumers and businesses, especially those in disadvantaged communities, benefit from the changing grid. Many of you have probably heard of the Duck Curve, which is explained in detail in the separate lecture in this series about the CHISO, and is due in large part to the increasing reliance on intermittent resources. It is a challenge to change from an electricity system that was controllable in its output and able to match changes in demand, and many thought less than a decade ago it was impossible to do. But the good news is that those predictions were wrong. We have a host of technology, policy, and market tools to plan, build, and operate an electric grid that is largely powered by intermittent resources. The challenge is getting those tools at scale, continuing to reduce costs, and ensuring that rates remain affordable. I entitled this part of the lecture achievements, challenges, and innovations very deliberately, so I want to touch briefly on offshore wind, a major example of the type of rapid innovation occurring in the energy system. This chart comes from an effort called America's Power Plan and shows projections of both offshore wind cumulative capacity and the significant cost decreases forecast in the very near term. These cost reductions are already occurring as the technology for offshore wind develops and greater experiences gained in permitting the facilities and integrating them into the electricity system. The second major challenge for the energy system is transportation decarbonization, and this is particularly true for California, whereas you may recall from one of my prior slides, transportation, including refineries, account for almost 50% of greenhouse gas emissions. But equally important, emissions from conventional transportation in California have severe air quality impacts, resulting in both non-compliance with federal air quality laws and major health consequences and costs. California is already a leader in clean transportation, with about half of the nation's zero energy vehicles, thousands of electric chargers, and an increasing number of public hydrogen stations. But more is needed. This chart shows the pathway for California to decarbonize its transportation sector in order to meet its climate goals. The challenge is daunting. The green wedge shows the portion of vehicles that must move to zero emissions through electric vehicles, fuel cells, or other technology. And let me also say that where this will happen through electric vehicles, this will increase the use of electricity in California's system, thereby making reliance upon energy efficiency and renewable power to produce that electricity even more important. The orange wedge decreases increased fuel efficiency or fewer miles traveled, and the blue is increased and more efficient use of transit systems. To achieve this change, not only are better technologies and lower costs needed, but also major changes in where housing and businesses are located and how people use or don't use vehicles starting this decade. California is setting goals for transportation decarbonization, developing roadmaps for policy development, investment in technology, and investing hundreds of millions of dollars in charging stations. But much more will be needed in the years ahead. On a positive note, California is part of an international trend to decarbonize the transportation sector. One example is an increasing number of cities and counties passing laws or policies to ban diesel engines or prohibit the sale of new internal combustion engines, ICE vehicles, by specific dates. A third major challenge is building decarbonization. Buildings in California account for about 25% of greenhouse gas emissions. For building decarbonization, the good news is that there are no carbon alternatives for space heating, water heating, and cooking. Recent studies identify building electrification as a low cost strategy for building decarbonization, focusing on switching from natural gas to electric heat pumps for space conditioning and water heating. Roughly 90% of the natural gas used in California is imported, while most renewable electricity is generated in-state, so there is also a component of in-state job growth. However, there may also be a role in buildings for renewable natural gas, at least in the near term, if cost-effective and available. But there are major implementation challenges for building decarbonization, as the cost of equipment and installation, consumer acceptance, concerns about future bill increases, development as standards, and the potential stranding of billions of dollars of gas infrastructure currently being used to serve existing buildings. In 2018, California enacted two groundbreaking laws for building decarbonization. SB 1477, which requires the CPUC to develop programs and to incent the installation of decarbonizing technologies in new and existing buildings. And AB 3232, which requires the CEC by 2021 to assess the feasibility of reducing greenhouse gas emissions in California's buildings to 40% below 1990 levels by 2030. Social equity issues in California are real and deep, and affect greatly California's efforts on clean energy and the climate. According to the California Budget and Policy Center, 8 in 10 low-income Californians are housing cost burden. More than 50% of low-income Californians are severely housing cost burden, paying more than 50% of their income in housing costs. And another 30% of low-income Californians pay at least 30% of their income in rent. Data suggests that 75% or greater of low-income people rent their homes, which impedes participation in clean energy programs, in addition to the other low-income challenges for access to capital. California has a long history of legislative priority for environmental justice going back to 1999. The traditional focus has been on direct interventions like energy bill assistance and energy efficiency weatherization programs. In recent years, however, under California's climate goals, a broader and more sophisticated approach is being taken. In 2012, then-Senator Kevin Day-Leone sponsored legislation that included the term Disadvantaged Communities, or DAX, and directed development of a tool to identify DAX known as Cal EnviroScreen. Three years later, in 2015, further legislation specified more clearly that California needed to prioritize overcoming barriers faced by DAX and low-income communities in clean energy investment. The most recent analysis from Cal EPA, relying upon Cal EnviroScreen, shows social inequity is a major issue when thinking about clean energy and better environment. Take a look at the figure on the right. It shows that 70% of the people who live in California's most disadvantaged communities are Latino, and another 10% are Black. Not only are minority groups dramatically overrepresented in our most disadvantaged communities, but this means larger portions of those groups overall are affected by pollution. According to Cal EPA's analysis, 35% of all Latinos in California live in the state's most polluted areas, and Asian Americans in the worst acts make up 17% of all Asian Americans in California. This is why SB 350's mandate to focus on disadvantaged communities is so important. Let me conclude this discussion of challenges and opportunities with a mention of a key report issued in 2018 by E3, who I referenced earlier. Last year, E3 issued a new report, the deep decarbonization update for the California Energy Commission. It is a report certainly worth studying. It evaluates long-term energy scenarios to achieve a 40% greenhouse gas reduction by 2030 and an 80% greenhouse gas reductions by 2015 using E3's pathways model. The report has four major conclusions. First, achieving California's climate goals will fundamentally transform the state's energy economy. Second, meeting the 2030 goals requires scaling up existing technologies and aggressive market transformation of new technologies not yet at scale, such as electric vehicles and electric heat pumps. Third, meeting the 2050 goals requires development of at least one new reach technology not yet commercially proven. And fourth, higher carbon prices and business and policy innovations will be essential. So let me end this lecture with some closing thoughts. The first point I want to make is there are foundational policies in energy that are critical for addressing climate change and developing a clean energy system. Without these policies and the funding to make sure they are achieved as well as public reporting on implementation and costs, progress on climate will be far too little and too late. Here is my list of the top seven. First, energy efficiency codes and standards as well as a focus on building decarbonization. Second, renewable requirements and markets or programs that pay for technology and actions that enhance the changing grid. Third, use of competitive markets and mechanisms to lower costs and support innovation. Fourth, carbon pricing via either a carbon tax or cap and trade. Fifth, recognition that transportation is part of the energy system and thus policies are needed in the areas of zero emission vehicle mandates, fuel efficiency and emissions standards and support for public transit system. And finally, policy that covers all elements and all people that are part of the energy system. California's economy wide approach to climate change with its focus now on disadvantaged community is a good example of this type of comprehensive policy. And finally, what else matters? Attention to ensuring reliability and affordability of the energy system must be addressed. While the costs of many technologies are decreasing significantly and some actions such as energy efficiency save money, there is no doubt that many of the energy actions needed to address climate change will require a very significant investment and burden the low income and disadvantaged communities the most absent strong policy attention. Reliability is critical both in setting standards that apply to all entities as well as transparency regarding compliance. And increasingly safety is paramount, especially in California with the widespread and increasing risks of wildfires, flooding and other aspects of climate change. So I end with four areas that I think policymakers and the public need to keep front and center. First, how with increasing number of suppliers including customers and technologies will reliability be insured. Second, how to set goals and fund programs that are affordable and to realize that the affordability issue in California covers not only the ability to afford new clean energy technologies and programs, but are part of wider social issues such as inadequate access to affordable housing, food, public health and education. Third, how to balance these priorities when they conflict. And fourth, how to effectively communicate to the public what are California's energy and climate policies, why they are needed and how they will impact the economy and lifestyles. Thank you.