With 2022 having just come to an end, we wanted to take the opportunity to spotlight some of the most impactful legislative and regulatory actions taken in California to meet the state’s goal of being a global leader in the fight against climate change.

California Climate Commitment

In 2021, California announced the “California Climate Commitment.” The Commitment broadly refers to the California budgets for 2021-2022 and 2022-2023 which, combined, invest $54 billion over the next 5 years into programs to combat against climate change, mitigate its impacts, and transition California to a climate friendly economy. Highlights of the plan include:

1. Over $8 billion to support and invest in renewable energy development;

2. Over $10 billion to support the transition to electric vehicles (EVs);

3. Approximately $14 billion for public transportation projects like high speed rail; Over $8 billion for drought resistance and water security; and

4. $2.7 billion marked for reducing the risks of wildfires in forests.

2022 was a pivotal year in the California Climate Commitment as the 2022-23 budget provides $38.8 billion of the total $54 billion committed towards these goals over the next 5 years.

California Climate Crisis Act

Assembly Bill (AB) 1279, otherwise known as the California Climate Crisis Act, was signed into law on September 19, 2022. AB 1279 led a broad series of climate change laws championed by Governor Newsom and officially codified California’s goal of achieving statewide carbon neutrality by 2045 and net negative greenhouse gas (GHG) emissions thereafter. In order to achieve these goals, the act directed the California Air Resources Board (CARB) to update its Scoping Plan (a sector by sector plan to achieve California’s carbon neutrality goals) to reflect the 2045 target.

In November, 2022, CARB released the final draft of its updated 2022 Scoping Plan for Achieving Carbon Neutrality and on December 16, 2022, CARB voted to approve and adopt this Scoping Plan. The Scoping Plan, along with the May 2022 Draft, details 4 potential scenarios by which California could achieve the ambitious goals of AB 1279. The Scoping Plan adopts “Alternative 3” as its working plan. Some highlights of the goals established or adopted by Alternative 3 include:

1. Drastic reductions fossil fuel demand by up to 94% for liquid petroleum and up to 86% for all fossil fuel by 2045;

2. Reducing GHG emissions to 85% below 1990 levels by 2045;

3. Deploying 20 GW of offshore wind development by 2045; and

4. Exploring technologies such as carbon capture and sequestration and green hydrogen, especially in hard to electrify sectors like heavy manufacturing.

Clean Energy, Jobs, and Affordability Act of 2022

Senate Bill (SB) 1020 – referred to as the Clean Energy, Jobs, and Affordability Act of 2022 – is also a part of the September barrage of climate change legislation. SB 1020 amends California’s previous target of having renewable and carbon neutral energy resources supply 100% of all retail sales of electricity within the state and 100% of all electricity used by state agencies by 2045. This act now requires renewable and carbon neutral energy supply:

1. 90% of all retail sales to California end users by 2035;

2. 95% by 2040;

3. 100% by 2045; and

4. 100% of all state agency electricity by 2035.

Starting in 2023, SB 1020 also requires CARB, the California Public Utilities Commission, and the California Energy Commission (CEC), to produce annual, joint reports reviewing the reliability of California’s transmission grid, with a focus on reliability during the summer months. Other provisions in SB 1020 direct state agencies to take into account energy security, long term job creation, the impact of energy prices on low income households and small businesses, and environmental costs when taking actions designed to further of California’s renewable electricity goals.

SB 1137

Effective January 1, 2023 SB 1137, creates a “health protection zone” of 3200 feet in any direction from schools, homes, public businesses, or healthcare facilities in which no new oil or gas wells can be developed. Although existing oil and gas wells are grandfathered in, beginning in 2025 operators must comply with a series of requirements in order to continue operation. Specifically, operators must, among other requirements:

1. Minimize disturbance or pollution from noise, lights, and dust;

2. Develop a leak detection and response plan subject to public comment and approval by the Geologic Energy Management Division of the California Department of Conservation by 2025 and have an approved plan in place by 2027; and

3. Develop policies for testing water quality when requested by the surrounding community in connection with work to be done at the oil or gas well.

Carbon Capture Laws (SB 905, AB 1757, and SB 1314)

One of the main takeaways from the sweeping legislation passed in September is that California views carbon capture and sequestration as a necessary component of its plan to achieve carbon neutrality – indeed, the California Climate Crisis Act was written to take effect only if SB 905 also became law.

SB 905 directs CARB to create a “Carbon Capture, Removal, Utilization, and Storage Program” to evaluate the effectiveness and safety of carbon capture technologies, develop policies to support the development of these technologies, prioritize reducing GHG emissions, minimize pollution and community impacts where carbon capture or sequestration technologies are deployed, explore private funding alongside expected state funding sources, reduce fossil fuel production, and maximize employment opportunities within the communities where the technology is deployed. The act also directs CARB to create requirements project operators must meet, including:

1. Maintaining financial responsibility for a time period “sufficiently long enough” to show that the risk of carbon dioxide leakage is not a threat to public safety or health, the environment, or the goal of reaching carbon neutrality;

2. In connection with the above requirement, maintaining financial responsibility over all corrective actions required at the project site, damages from seismic events, and costs due to project site maintenance or closure, among other costs;

3. Creating a plan to mitigate pollution and monitor air quality, and

4. Showing an agreement between all relevant parties that the area where carbon is stored will not be drilled for 100 years after the last carbon injection.

While carbon capture is clearly a priority for California, SB 905 itself creates some uncertainty about how and when it will be implemented, as the act prohibits carbon from being transported to storage sites via pipeline until the Federal Pipeline and Hazardous Materials Safety Administration provides minimum standards for carbon transportation via pipeline. This rulemaking process was announced in May 2022 and the final rule including the required standards may not be issued for years.

AB 1757 and SB 1314 provide smaller additions to California’s commitment to exploring carbon capture and sequestration. AB 1757 instructs the Natural Resources Agency to explore using natural methods and nature based climate solutions such as forest conservation, sequestration involving vegetation and soils, and land management actions and to provide targets for carbon capture via these strategies by 2024. SB 1314, meanwhile, furthers California’s mission to minimize its demand for fossil fuels by prohibiting captured carbon from being injected into wells to improve oil recovery.

CEC 2022-2023 Investment Plan Update

In connection with the recent rule approved by CARB which will prohibit the sale of gas powered vehicles in California after 2035, pursuant to the CEC’s Investment Plan Update for the Clean Transportation Program^[1], the CEC earmarked $2.9 billion dollars over the next 4 years for the installation of EV charging stations. The funding package includes $900 million for consumer vehicle charging and $1.7 billion for medium to heavy duty vehicle charging stations. At the end of the 4-year period, the Plan is expected to have installed 90,000 new charging stations, more than double the roughly 80,000 that CARB estimates are currently operational. If successful, this Plan will be a large step towards California achieving its goal of having 250,000 EV charging stations operational by 2025. Funds from the plan are available primarily through a competitive bidding process, after which the chosen bidders would enter into direct funding agreements with the state.

Conclusion

To stave off the worst impacts of global warming and climate change, large financial commitments and ambitious policies from all levels of government will be required. California is pushing to lead this effort. 

The effects of the actions taken by California will not be known for decades after these and future investments and policies have run their course. Ultimately it is unclear whether California can realistically meet the goals it has set for itself. However, the state has shown that it is prepared to make drastic policy decisions that affect nearly all sectors in pursuit of those goals – an important consideration for all those who live or do business within the state.

FOOTNOTES

^[1] CEC’s plan can be downloaded from the linked website.