California Resources Corp.: California Rationalization – Round 2

Research evidence excerpt

California Resources Corp.: California Rationalization – Round 2

Barclays | California Resources Corp.

setup with catalysts from RCPPP finalization, Uinta monetization, Huntington Beach real estate,

and continued upstream execution.

RCPPP represents a structural shift in how California procures power. Rather than relying

on ad hoc procurement, the framework will require utilities to meet both a clean energy

standard (CES) and an ELCC-based reliability requirement. This reflects a critical

acknowledgment by regulators that renewables alone cannot meet California’s 2045 clean

energy mandate while maintaining reliability. While the rules still need to be finalized, the

overarching framework is established:

• Unlike the current system of ad hoc procurement, RCPPP will incentivize a technology-

neutral, least-cost approach in achieving both clean and reliability targets.

• Power producers must satisfy the clean energy mandate with both renewable credits (RECs)

and zero-emission credit (ZECs)...

• ...but ELCC-based system effectively forces migration to zero-emission firm resources,

even in the absence of explicit quotas. This is due to the effective capacity discount of

intermittent resources. The more intermittent resources on the grid, the less value they

contribute to system reliability.

• While gas with CCS is not yet formally included, it has already been recognized by the CEC as

a zero-carbon firm solution and has garnered broad stakeholder support, positioning it as a

leading candidate for inclusion as rules are finalized.

• The process is now in its final stages, with a proposed decision and CPUC vote expected

this year, which will define resource eligibility and set the direction for post-2030

procurement.

The implications for CRC are significant.