By Rory Carroll

SAN FRANCISCO (Reuters) - California's lieutenant governor on Friday directed the State Lands Commission to draw up a plan for a thorough environmental review of PG&E's Diablo Canyon power plant, the state's last operational nuclear power plant.

PG&E's leases with the state for two structures associated with the 2,240-MW power plant, which is located on the coastline in San Luis Obispo County, are set to expire in 2018 and 2019, respectively. PG&E is looking to extend those leases through 2025.

The lieutenant governor, Gavin Newsom, said the plant should have to pass a broad California Environmental Quality Act (CEQA) review, which it was not subject to prior to opening in 1985.

"On the one hand we have Fukushima etched in our memories, and on the other hand we are tackling fossil-fuel-driven climate change," Newsom said. "This is incredibly complex and of no surprise that decisions have been avoided."

He said the environmental review should take into consideration Governor Jerry Brown's stated goal of generating half of the state's electricity from renewable sources by 2030.

While nuclear power plants do not produce heat-trapping carbon dioxide emissions like coal and natural gas power plants do, they are not considered "renewable" energy, like wind and solar.

PG&E said it does not believe there are any CEQA issues associated with issuing the lease.

"Diablo Canyon Power Plant is a safe, clean, reliable and vital energy resource for PG&E's customers and a significant economic engine for the Central Coast," Blair Jones, a PG&E spokesperson, said on Friday.

Newsom noted that the plant is located near recently identified seismic fault lines.

PG&E this year submitted to federal nuclear regulators an updated assessment of earthquake potential on Diablo Canyon, which found its design can withstand potential earthquakes in the region. The report is currently under review.

Newsom asked the California Lands Commission to come back with the environmental review plan in February.

(Reporting by Rory Carroll; Editing by Leslie Adler)