Industry says policy; researchers point to global markets — committee hears competing explanations for refinery closures

A central point of contention at the Senate hearing was what is driving refinery closures and how much the state’s environmental and climate policies should be adjusted to preserve in‑state refinery capacity.

Zach Leary of the Western States Petroleum Association argued state policy and regulatory costs have made California uncompetitive for refining and that further increases in compliance costs could accelerate closures and shift production, jobs and emissions out of state. ‘‘California is losing refineries because of state policies that have made it uneconomic to operate here,’’ he said.

Researchers and agency officials pushed back on single‑factor explanations. Tom Herzbach (Stanford) listed five drivers of refinery decline — depleting and costly in‑state crude, declining gasoline demand, consolidation to larger refineries, export‑oriented production, and increased import availability — and recommended proactive planning because the timing of closures is uncertain. Vice Chair Siva Gunda and CARB staff agreed the causes are multi‑faceted; Gunda said that California policy is only one of several elements and that global market shifts, crude quality and ROI calculations also matter.

CARB emphasized that its programs (including the Low Carbon Fuel Standard and cap‑and‑invest frameworks) are designed to address lifecycle emissions and leakage concerns and apply compliance obligations to transportation fuel suppliers at the point of market entry, regardless of whether fuels are refined in‑state or imported.

What they disagree about matters for policy choices. Industry urged careful calibration of future regulatory costs to avoid accelerating closures; researchers and EJ/labor advocates argued the right response is not to roll back standards but to design coordinated measures (disclosure, financial assurance, worker transition funds, storage and import planning) to manage closures while meeting climate goals.

The committee did not resolve the causal debate but asked staff to develop options that recognize both competitiveness and community‑level liabilities.