Silhouette of refinery in front of map of Contra Costa County, California.

Refining Transition: A Just Transition Economic Development Framework For Contra Costa County, California

In 2020, Contra Costa County’s Marathon Martinez oil refinery idled and the company laid off over 700 workers with minimal notice. Labor unions and environmental justice groups came together to form the Contra Costa Refinery Transition Partnership (CCRTP), a coalition to prepare for  the energy transition in Contra Costa and develop strategies to ensure that it is a  just transition. The UC Berkeley Labor Center serves as the lead research partner for the CCRTP.

This report analyzes the challenges and opportunities facing Contra Costa County as changes in the region’s refinery industry unfold. It offers a framework for economic development planning that can help policymakers navigate the transition in a way that meets the needs of refinery workers and local communities.

CCRTP’s final report and recommendations are available here: Report and Recommendations of the Contra Costa Refinery Transition Partnership. Additional research completed for the CCRTP included Fossil Fuel Layoff: The Effects of a Refinery Closure on Workers in the Bay Area, and the San Francisco Bay Area Refinery Transition  Analysis.

Executive summary

The transition to clean energy is necessary and urgent, both for fighting climate change and for reversing a long history of pollution and environmental injustice in fossil fuel producing communities. California has been a national leader in climate action and clean energy, setting ambitious targets for reducing greenhouse gas emissions and investing in scaling up renewable energy industries and infrastructure. The state’s leadership has unleashed market forces that are already in motion: California leads the country in electric vehicle registrations[1] and is one of the top producers of renewable energy nationwide.[2]

Meanwhile, the petroleum industry has been a fixture of the local economy in Contra Costa County, in the East Bay region of California, since the first refinery began operations in 1896 in the city of Rodeo. Contra Costa is a hub of refining for Northern California, home to four of the five Bay Area refineries. As California advances toward its goal of reducing carbon emissions to combat climate change, the refinery industry and the local economy in Contra Costa face an uncertain future. Refinery closures are already happening—in 2020, the Marathon Martinez refinery announced it would idle and laid off over 750 workers. The announcement was shocking and painful for workers and their families, many of whom had worked at the refinery for multiple generations. People wondered if Marathon’s idling heralded more imminent refinery closures.

In the aftermath of the Marathon layoffs, local labor and community groups formed the Contra Costa Refinery Transition Partnership (CCRTP), supported by the California Workforce Development Board’s High Road Training Partnerships program. The goals of the CCRTP are to understand what changes in refinery operations are on the horizon and what it will mean for Contra Costa workers and communities, and to inform a strategy for navigating these changes in a way that leads to a fair and just transition.

The UC Berkeley Labor Center provided research to support the CCRTP in pursuit of its goals. This report presents a synthesis of several research projects completed for the CCRTP, including San Francisco Bay Area Refinery Transition Analysis,[3] and other analyses of regional economic trends and refinery impacts. It also incorporates learnings from our 2023 report Fossil fuel layoff: The economic and employment effects of a refinery closure on workers in the Bay Area.[4]

In this report, we discuss the challenges and opportunities facing Contra Costa as it prepares for the cascading effects of an energy transition that is already unfolding. We propose a just transition framework to guide an economic development strategy capable of addressing the specific challenges facing Contra Costa and setting the county on a path toward a more resilient, healthy, and equitable local economy. The findings and framework we propose are tailored to the specific circumstances in Contra Costa but offer essential lessons for other communities with an economic reliance on fossil fuel production. This report accompanies Report and Recommendations of the Contra Costa Refinery Transition Partnership,[5] which presents the partnership’s detailed recommendations for a just transition in Contra Costa County.

Additional refinery closures in Contra Costa County are likely in the coming decades. Without a robust and just transition strategy, Contra Costa faces a future of deteriorating public services, worsening inequality, and prolonged threats to public health. Three core challenges include:

  1. Loss of tax revenue for essential services: Refineries and related industries generate a significant share of local tax revenue. Refinery closures in Contra Costa County will reduce this revenue, threatening critical public services and public sector jobs.
  2. Loss of good jobs without comparable replacements: Low-wage jobs are a growing share of the local labor market, leaving displaced refinery workers with limited options to move into jobs with comparable pay and benefits. Local workers from disadvantaged communities continue to have limited options for quality jobs and upward mobility.
  3. Continued public health hazards: Pollution from refineries and other industries has led to serious public health impacts for people who live nearby, who are disproportionately low income and people of color. Refinery closures will reduce air pollution but will nonetheless pose ongoing health hazards without extensive cleanup of land and water. In addition, without protections in place, new post-fossil fuel industries could continue to perpetuate environmental injustice in the region.

Challenges facing Contra Costa County

Changes in the market for refinery products are already underway, as Marathon’s idling indicates. The CCRTP commissioned an analysis of refinery transition scenarios to better understand how California’s climate strategies could affect the market for refined petroleum products and how the local refineries are likely to respond. The report San Francisco Bay Area Refinery Transition Analysis was completed in 2022 and is being released concurrently with this report.

The Refinery Transition Analysis estimates future demand for Bay Area[6] refinery products using the transportation energy demand projections included in the 2022 CARB Final Scoping Plan.[7] The analysis finds that the reduced market demand for gasoline by 2045 will lead to between a 65% and 92% reduction in the refinery capacity needed in the Bay Area, depending on export trends. While there are uncertainties in how these changes will unfold and how companies may respond, decline in demand for refinery products will threaten the viability of traditional petroleum refinery operations in the Bay Area and is likely to lead to facility closures.

Refinery closures will bring real relief to those in the community who have suffered from the health effects of industrial pollution. People living near the Contra Costa refineries, which includes a disproportionate share of the county’s low-income residents and people of color, have long experienced higher rates of respiratory, cardiovascular, and other health issues related to increased levels of toxic air pollutants from the refineries and heavy industry.[8] Reducing pollution will reduce the public health burden and can improve equity and quality of life in Contra Costa County.

Without a clear plan and resources for decommissioning and cleanup, however, closures could still present ongoing environmental and safety hazards. A 2019 explosion and fire at a refinery in Philadelphia offers a cautionary tale about the risks of company disinvestment prior to facility closure.[9] Moreover, future industrial activity will not necessarily have better public health impacts than current industries, absent deliberate strategies for preventing new sources of pollution.

The effects of refinery closures could exacerbate rising inequality in the county in several ways. Jobs in the refinery industry are among the highest-paying jobs in Contra Costa that do not require a four-year degree, and most refinery workers are represented by a union. The most common refinery occupations earn a median wage of around $50 per hour, plus benefits. In contrast, the most common occupations in the county that do not require a college degree earn a median wage around $20 per hour (home health and personal care aides, cashiers, and fast-food workers).[10] The front-line refinery workforce is majority male but racially diverse; people of color represent a majority of the local workforce for several refinery occupations, including maintenance, transportation, production, and construction jobs.[11] Additional layoffs would shrink an already scarce supply of quality blue-collar jobs in the local labor market, and leave refinery workers with few good employment opportunities.

Layoffs have already had dire consequences for refinery workers, and offer a warning about future risks for workers in the region.[12] While refinery workers have advanced skills that can translate to a wide range of occupations, many workers laid off from the Marathon Martinez facility had difficulty communicating these skills to new potential employers, and they struggled to find jobs that would recognize their skills and compensate them comparably. A year after the layoff, 26% of workers were unemployed (excluding retirees), and those who had found new jobs experienced substantial reductions in pay. Workers at Marathon earned median wages of $50 per hour, but only $38 per hour in their post-layoff jobs—a 24% cut in pay. Workers also reported a decline in working conditions in their new jobs, such as poor safety practices and increased worksite hazards.

Workers are likely to face even more challenges as the Contra Costa refinery industry contracts and more workers are laid off. In total, the refinery industry and related activities account for an estimated 18,000 jobs in Contra Costa County—3,000 jobs working directly for refinery companies, and another 15,000 jobs in supply chain industries such as construction, trucking and transportation, facilities maintenance, and other services.[13] Projected employment growth for jobs that require comparable skills to the top refinery occupations is limited in the region, and median wages for those jobs are around 50% lower than refinery jobs.[14]

As petroleum refining declines in Contra Costa, tax revenue generated by the industry and its supply chain will also decline. Declining tax revenue from the refinery industry and its supply chain threatens funding for public sector jobs and essential public services. The refinery industry generates tax revenue for local governments in Contra Costa County via sales taxes, property taxes, special assessments, and other taxes paid by refinery companies (direct tax impacts).  Economic activity that provides inputs into the refinery industry also generates tax revenue (indirect tax impacts). The refinery industry in Contra Costa directly generated an estimated $136 million in local taxes in 2022; activities that provide inputs into the refinery industry in Contra Costa generated an estimated $836 million in local taxes in 2022.

Tax revenue from the refinery and its supply chain represents a significant share of local revenue: direct tax impacts from the refinery industry were an estimated 1% of total county revenue in 2022, and 5% of locally-generated tax revenue. Direct tax impacts from the refinery industry were an estimated 3.5% of total special districts revenue in 2022. Indirect tax impacts are larger: indirect tax impacts from the petroleum refinery industry were an estimated 5% of total county revenue in 2022, and 31% of locally-generated tax revenue. Indirect tax impacts from the petroleum refinery industry were an estimated 22% of total special districts revenue in 2022.[15] Local tax revenue contributes to funding for a wide array of essential activities in the County, including fire protection, water, transportation, sanitation, transit, and more. These activities employ many unionized public sector workers in Contra Costa as well.

The refinery supply chain contributes a much larger share of local tax revenue than the refinery companies themselves; given the impacts of refineries and related activities on local public health and pollution, community advocates have argued that the refinery industry ought to pay higher taxes than they currently do.[16] Currently, the cumulative tax impact of the industry and its supply chain constitutes a substantial share of local resources available for essential public services. As the refinery industry shrinks, there will be reductions in revenue that could put funding for essential services in Contra Costa in jeopardy.

Future scenarios in an unjust transition

Refinery transition could lead to dismal future outcomes for Contra Costa without a change in course. In one scenario, refinery closures could trigger a broader disinvestment and deindustrialization feedback loop, reminiscent of the fate of some manufacturing communities in the second half of the 20th century. As private investment flees the area and local businesses struggle, high-quality job opportunities for workers without a college degree will continue to diminish, local tax revenue will fall, and the gap between the supply of public services and growing need for those services will widen. Funding needs for remediation and cleanup will remain unmet.

In an alternative (but not mutually exclusive) scenario, the closure and cleanup of former refinery sites could worsen inequality by accelerating gentrification in Contra Costa. Improved environmental conditions may raise property values in some refinery-adjacent areas, attracting more high-income households and further entrenching Contra Costa as a bedroom community for high-wage workers in the San Francisco Bay Area. Increased costs of living will add to displacement pressure for low-income communities in the county, in particular for people who live near refineries and have suffered the greatest consequences from their pollution.

In a third possible scenario, Contra Costa succeeds in attracting and growing new industries to replace the declining oil sector, but it fails to effectively hold companies accountable for job quality and pollution impacts, replicating and reinforcing existing patterns of inequality and injustice in the county. Each of these scenarios is an entirely possible outcome of a declining oil sector in Contra Costa County unless there is a clear plan in place that prioritizes the wellbeing of workers and frontline communities.

An opportunity for a just transition

The energy transition provides a historic opportunity for Contra Costa, despite these grave challenges. As the county prepares for contraction in a significant sector—one that plays an important economic role and poses critical environmental and public health challenges—it has an opportunity to correct course on longstanding challenges as it plans for the future. Through a carefully crafted transition plan, the county can reverse trends of inequality and environmental injustice, and build an environmentally and economically resilient community which prioritizes equity and the health of the local community, all while working toward California’s climate objectives.

The CCRTP partners envision a future in which working class people across Contra Costa have access to good jobs with family-supporting wages and a union; clean air and water and a healthy environment; livable neighborhoods with affordable housing and quality food; widely available public services; and infrastructure, industries, and businesses that meet the needs of local communities and protect against the impacts of climate change.

It is possible for Contra Costa to build such an economy. The county and surrounding region have abundant natural, built, and social assets, including port and transportation infrastructure, research and educational institutions, and leading innovation industries. They also have a vibrant culture of community and worker organizing, exemplified by the members of the CCRTP.

Tapping into Contra Costa’s potential to achieve these outcomes requires a just transition approach to economic development planning: one in which the quality of growth matters as much as the quantity, and local communities are at the center of shaping the county’s vision for its future economy. In a just transition approach, environmental justice and economic justice are not oppositional forces to growth; instead they are necessary, complementary strategies for achieving a specific and desired quality of growth.

A just transition economic development framework

The CCRTP process involved engagement with labor and environmental justice stakeholders in Contra Costa to share ongoing research findings, and collaborative workshops to inform the objectives and priorities that can anchor a strategy to achieve a just transition. Our work surfaced three core objectives for addressing transition-related challenges in Contra Costa in a way that builds an economy that is more resilient, with healthier and more equitable communities:

  • Good jobs: increase access to quality jobs, particularly for displaced refinery workers and workers from historically marginalized communities.
  • Healthy communities: stop polluting land, air, and water, and target environmental and health improvements in areas that have experienced disproportionate pollution burdens.
  • Economic resilience: reduce the county’s economic dependency on fossil fuel production by diversifying and increasing other sources of tax revenue.

Good jobs, healthy communities, and economic resilience are not mutually exclusive objectives. As local governments and communities in Contra Costa navigate refinery transitions, efforts to promote economic development should prioritize activities that advance each of the three objectives; this is visually represented as the center of the diagram in Figure 1.

A just transition economic development framework for Contra Costa County is outlined in Table 1. The framework is informed by best practices, the research findings discussed in this report, and the concerns and priorities of organizations involved in the CCRTP.

Venn diagram of three circles labeled "economic resilience," "healthy communities" and "good jobs," with the area of overlap labeled "priorities for investment." Below is table outlining the just transition framework.

A just transition prioritization framework is an important starting point for developing an economic development strategy that meets the needs of Contra Costa and addresses its core transition-related challenges. The partners involved in the CCRTP represent the primary constituencies most affected by refinery transition and its consequences, in some similar ways and in some very different ways. Their shared priorities represent important areas of agreement, where a broad array of stakeholders can collaborate toward common objectives and problem-solving related to the challenges facing the county.

The framework offers two foundational principles to guide planning, drawing on best practices from high-road economic development.[17] The first principle is a robust commitment to democratic processes. A democratic planning process should ensure that local worker- and community-based organizations play a central role in decision-making, and that historically marginalized populations are explicitly included. Democratic economic development processes should also support democracy within workplaces by supporting unions in the local economy and including them as partners in local economic and workforce development planning.

The second principle is a pursuit of demand-driven workforce strategies. Demand-driven refers to strategies that shape the demand for quality jobs and a skilled workforce, versus strategies that focus solely or primarily on generating a supply of trained workers. Demand-driven strategies ensure that workforce training investments are an effective and efficient use of resources, and that workforce and economic development activities achieve just transition outcomes.

We discuss a variety of policy tools that policymakers and stakeholders can use to design and implement a just transition economic development strategy in Contra Costa County. We group these tools into three categories: game plan tools that establish clear, democratic planning processes; goal post tools that direct investment toward priority activities; and guard rail tools that ensure that just-transition economic development activities achieve desired outcomes, as defined by local stakeholders.

There are two broad investment strategies for building a more just and equitable economy, in which stakeholders can identify specific activities that advance each of the three core priorities:

  1. Invest in infrastructure that supports a just transition. Investing in public infrastructure and services can improve equity and quality of life, while also facilitating economic activity and generating high-quality, working-class jobs. Physical and natural infrastructure includes the structures and systems necessary for an economy and community to function, providing access to basic needs like water, sewer, power, transportation, and a healthy environment. Social infrastructure—such as health care services, education, care services, and social services—is no less important for a region to thrive. Achieving just transition outcomes requires resources to fund public investments, as well as a community-driven process of prioritization and clear standards that ensure quality job creation and equitable access to jobs and public benefits.
  2. Invest in industries that support a just transition. Public investment in industry growth can create jobs for local residents, expand the local tax base to fund public goods and services, meet the needs of local communities, and generate important spillover effects for other firms and positive feedback loops for economic development. Achieving just transition outcomes in the private sector requires a high-road approach for fostering race-to-the-top growth based on collaboration and cooperation among firms, versus race-to-the-bottom competition.[18] That may involve, for example, job quality and training standards, community benefits agreements, and environmental accountability mechanisms built into incentives. It may also involve strategies to close off the low road by establishing regulations or other policies that prohibit undesirable practices.

We do not prescribe specific investment targets in this report. Instead, we highlight several industries and types of infrastructure that local policymakers and stakeholders should consider, given their role in Contra Costa’s economy and the opportunities and risks they present relative to just transition priorities.

Contra Costa should consider clean energy industries and infrastructure as potential priorities in its economic development strategy. The imperative to reduce GHG emissions has compelled government action to regulate and invest in ways that support decarbonizing infrastructure, and that spur private investment in new, low-carbon industries and technologies. As a result, there are additional resources and market growth potential in these areas that represent important opportunities for economic development in Contra Costa. California continues to lead the nation in climate change action and clean energy investments, and the Biden-Harris Administration made historic investments through the Bipartisan Infrastructure Law (BIL), the Inflation Reduction Act (IRA), and the CHIPS and Science Act (CHIPS). Federal and state investments have targeted a wide range of sectors and activities, but many have been specifically aimed at advancing clean energy and climate resilience, growing critical supply chains in the U.S., and supporting economic development in disadvantaged communities.

Public investment currently fails to match the levels of need in Contra Costa, however. Available funding is limited for critical activities that the county requires, specifically in areas like health care and education, and in targeted support related to the impacts of the energy transition. California’s recent budget cuts also threaten the state’s progress and leadership in building an equitable green economy. The limited availability of public investment makes it all the more urgent for the county to ensure that it maximizes the available state and federal funds it draws into the region, while advocating for the additional resources that it needs.

It’s important to note that some of the activities supported by federal and state investment may not be a good fit for Contra Costa. These include, for example, activities that are reliant on the long-term commercial viability of local refineries or that add to pollution in already-burdened areas. Policymakers and local stakeholders must evaluate which opportunities align with the county’s priorities and ensure appropriate standards for implementation.

Nonetheless, existing public resources aimed at building a green economy offer an opportunity  to kick-start a just transition economic development strategy in Contra Costa. Investing in clean energy and climate resilience infrastructure is one important area of exploration. The county has urgent needs to prepare for sea level rise and clean up toxic sites, improve and expand clean energy generation and distribution, and upgrade zero emissions transportation and transit infrastructure. Improving water and waste infrastructure and reducing energy use in buildings are also important elements of a healthy and sustainable future for the region. State and federal resources may be available to support each of these activities.

Public investments targeting manufacturing in clean energy supply chains—such as batteries, electric vehicles, and offshore wind components—could play an important role in supporting the region’s economic resilience by generating new sources of tax revenue not reliant on the refineries, and by generating jobs that align with displaced workers’ skills. There are opportunities to encourage these activities with current public funding, but there are also real risks that these investments could lead to poor quality jobs and added pollution burden for surrounding communities without adequate standards and community and worker input.

Our framework concludes with a recommendation for two next steps to develop a just transition economic development strategy in Contra Costa. First, we recommend that local governments adopt the elements of the just transition framework to guide economic development planning, including a clear and consistent approach to job quality, equity and environmental standards, and a process for community and worker-driven prioritization. Second, we recommend that local stakeholders and policymakers seek to leverage opportunities to attract and cultivate investment in strategically important sectors such as clean energy industries and infrastructure.

We intend the just transition framework to function as a tool to help guide stakeholders and policymakers in Contra Costa through refinery transition planning in a way that addresses underlying and acute challenges, and establishes the foundation for strategies that can build a more equitable and resilient economy. Its purpose is to provide the architecture for a community- and worker-led planning process that can help move the local economy away from the low road and toward the high road.

The process starts with a grounded understanding of the economy that currently exists, and a shared vision for what the economy of the future should look like. From there, stakeholders can identify priorities, investment strategies, and policy tools to help achieve just transition outcomes that are specifically tailored to the needs of the local economy and local communities.

Lessons learned for just transition planning in other regions

The research discussed in this report reflects the conditions in Contra Costa County and the specific priorities of local stakeholders, but offers important insights that can guide other communities through an energy transition planning process:

  1. Anticipate and plan in advance for energy transition and its impacts. While there is still some uncertainty about exactly how the energy transition will unfold, the transition is already underway and will continue to have significant impacts on places like Contra Costa County that have an economic reliance on fossil fuel production. Communities must seek out reliable information about the local impacts of the energy transition.
  2. Prioritize a community stakeholder-led planning process. A just energy transition should be driven from the ground up by the communities who will be most affected. A community-led policymaking process will involve tough conversations with stakeholders who have diverse perspectives and will require confronting historical patterns of inequality and injustice. Engaging with these difficult issues directly is necessary to develop a strategy that reflects and responds to the concerns of these affected groups.
  3. Integrate local efforts and unite them under a just transition strategy that incorporates new and ongoing challenges. Developing a cohesive just transition strategy that achieves shared priorities requires a common framework with agreed-upon objectives and priorities, and resources for coordination among local groups and jurisdictions.
  4. Ensure that investments incorporate standards to achieve just transition outcomes. Public funding can help achieve a just transition by prioritizing investments at activities that advance shared objectives, and by incorporating clear and enforceable standards that ensure these outcomes.
  5. Seek support, investment, and priority alignment from outside the region. The broader Bay Area region, the state of California, and the federal government all have a stake in a successful, just transition in communities reliant on fossil fuels. Places like Contra Costa County can leverage this and seek external investment and support.

Read the full report.

Endnotes

[1] U.S. Department of Energy, Energy Efficiency and Renewable Energy, “Alternative Fuels Data Center.”
[2] U.S. Energy Information Administration, “Independent Statistics and Profile Analysis.”
[3] Simeone and Lange, “San Francisco Bay Area Refinery Transition Analysis.”
[4] Parks and Baran, “Fossil Fuel Layoff.”
[5] BlueGreen Alliance Foundation, “Report and Recommendations of the Contra Costa Refinery Transition Partnership.”
[6] Four of the five bay area refineries are located in Contra Costa County. Valero operates a refinery in Benicia (Solano County).
[7] CARB’s Scoping Plan maps out the state’s strategies to achieve carbon neutrality by 2045. California Air Resources Board, “2022 Scoping Plan Documents.”
[8] Communities for a Better Environment, “Richmond Health Survey Report”; August et al., “CalEnviroScreen 4.0.”
[9] Simeone, “An Unrefined Ending.”
[10] See Table 27 in Appendix A.
[11] Note: based on industry-wide race and ethnicity breakdown for workers in occupations present in refineries in Contra Costa County. U.S. Census Bureau, “Equal Employment Opportunity Data: 2014–2018 EEO Tabulation.”
[12] Parks and Baran, “Fossil Fuel Layoff.”
[13] IMPLAN, “Data for Model Region Including Contra Costa County.”
[14] See Appendix B. Refinery worker job match analysis.
[15] Authors’ analysis; California State Controller’s Office, “Local Government Financial Data—County Revenues 2022”; IMPLAN, “Data for Model Region Including Contra Costa County”; California State Controller’s Office, “Local Government Financial Data—Special District Revenues 2022.”
[16] Ellis, “Richmond OKs $550M Chevron Settlement, Will Pull Tax Ballot Measure”; Polluters Pay, “Richmond Polluters Pay.”
[17] High Road Strategy Center, “What Is the High Road?”
[18] High Road Strategy Center, “What Is the High Road?”