From Fossil Fuels to Electricity: How Much Time Does California Have, and How Quickly Can the Transition Happen?

At Green Policy Initiative, we recognize that California is at a pivotal moment in reshaping its energy future. The recent announcements by Phillips 66 and Valero to shut down their major oil refineries are more than isolated corporate decisions; they signal a shift in the state’s energy landscape. Phillips 66 will close its Los Angeles refinery by late 2025, a facility responsible for about 8% of California’s gasoline supply. Valero plans to halt or significantly restructure operations at its Benicia refinery by April 2026, which processes approximately 145,000 barrels of oil daily. After these closures, only seven refineries will remain to serve nearly 40 million residents. This reduction in refining capacity raises serious concerns about the reliability of fuel supplies, potential price increases, and greater volatility at the pump. With fewer refineries operating, California’s ability to respond to supply disruptions will be diminished, increasing the state’s dependence on imported fuels and exposing it to global market fluctuations and geopolitical risks. There’s only a stronger urgency to accelerate the transition to clean, renewable energy sources while carefully managing the decline of fossil fuel infrastructure to avoid economic and social disruptions.

The refinery closures are closely linked to California’s ambitious climate policies and stringent environmental regulations. The state has committed to sourcing 100% of its electricity from clean energy by 2045 and aims to have 5 million electric vehicles on the road by 2030. These goals are reflective of California’s leadership (that of Governor Newsom) in combating climate change and improving public health. However, they also exert significant pressure on the fossil fuel industry. As adoption of electric vehicles and renewable energy grows, demand for gasoline and diesel steadily declines, challenging the economic viability of traditional oil refining operations. This shift is forcing companies like Phillips 66 and Valero to reevaluate their roles in the state’s energy system. While these changes are necessary for a sustainable future, they bring challenges that require thoughtful policies to support workers, communities, and industries affected by this transition. At Green Policy Initiative, we emphasize that a just transition is essential to ensure that no one is left behind as California moves toward a cleaner energy future.

The immediate consequences of these refinery shutdowns will ripple across California’s economy and daily life. Fuel prices are expected to rise, and with fewer refineries operational, any unexpected event such as maintenance delays or accidents could cause supply shortages and sharper price spikes. This volatility threatens to strain household budgets and disrupt transportation and commerce. Moreover, communities dependent on refinery jobs face economic uncertainty, highlighting the need for targeted support and retraining programs. Meanwhile, California’s electricity grid must prepare for a surge in demand as transportation and heating systems shift to electric power. Upgrading grid infrastructure, expanding energy storage solutions like large-scale batteries, and ensuring reliable power supply during periods without sun or wind are critical challenges that require immediate attention and investment. Without these improvements, the state risks energy shortages and affordability issues that could eat away at public support for the transition. 

While the falling costs of solar and wind power and advances in battery technology keep us optimistic, the path forward is complex and requires sustained effort. Strong policy frameworks and growing corporate commitments to net-zero emissions should provide a foundation for rapid change. However, many sectors such as heavy industry, aviation, and shipping remain heavily reliant on fossil fuels due to the lack of viable alternatives. Developing and scaling new technologies for these sectors will take time and significant investment. Additionally, building the necessary infrastructure to support widespread electrification involves overcoming regulatory, technical, and social hurdles. Moving too quickly without adequate planning and support could jeopardize energy security and affordability, disproportionately impacting vulnerable populations. The International Energy Agency projects that renewable energy will dominate global electricity generation by 2030, and California is well-positioned to lead this shift. Yet, the refinery closures compress what might have been a decade-long transition into just five to seven years for some sectors. Success will depend on coordinated efforts across government, industry, and communities to upgrade the grid, expand energy storage, and accelerate adoption of electric vehicles and clean appliances. Policymakers must craft inclusive policies that balance urgency with fairness, ensuring no community or worker is left behind.

In addition to infrastructure and technology challenges, public engagement and education will play an important role in California’s energy transition. Consumers will need to adapt to new technologies and changing energy costs, while local governments must navigate complex land use and permitting issues for renewable energy projects and grid upgrades. Building public trust through communication and demonstrating the benefits of clean energy, such as improved air quality, job creation, and long-term cost savings, will be essential. Green Policy Initiative supports initiatives and policies that will empower communities to participate in the decision-making process and benefit directly from the clean energy economy. Equitable access to clean energy resources and workforce development programs will see to it that all Californians share in the transition’s opportunities and advantages.

The closure of Phillips 66 and Valero refineries marks a defining moment in California’s energy journey. At Green Policy Initiative, we see this as a call to action for bold leadership and thoughtful planning to create a cleaner, more resilient, and equitable energy future. The next five years will be critical in determining whether California can meet its climate goals while maintaining energy reliability and economic stability. If managed well, California can serve as a global model for transitioning from fossil fuels to electricity in a way that balances environmental imperatives with social and economic needs. The road ahead will be challenging, but with strong leadership and innovation, California can lead the way toward a sustainable energy future that benefits all its residents.