California laws and regulations have established the following targets:
- A 40% reduction in GHGs by 2030 compared to 1990 levels.
- 50% of retail energy sales to customers from renewable energy sources by 2026 and 60% by 2030.
- Economy-wide State carbon neutrality by 2045, with net negative emissions thereafter.
- Renewable and zero-carbon resources supplying 90% of utilities’ retail sales to customers by 2035, 95% by 2040, and 100% by 2045.
The CARB has also approved GHG emissions reporting and a state-wide, comprehensive cap-and-trade program that sets gradually declining limits (or “caps”) on the amount of GHGs that may be emitted by major GHG emission sources within different sectors of the economy. The cap-and-trade program has been extended through 2030. The CARB plans to update the cap-and-trade regulation in 2025 and is considering reforms that would reduce overall allowance budgets to align with CARB’s 2022 Climate Change Scoping Plan.
During each year of the program, the CARB issues emission allowances (i.e., the rights to emit GHGs) equal to the amount of GHG emissions allowed for that year. Entities with a compliance obligation can obtain allowances from the CARB at quarterly auctions or from third parties or exchanges. Complying entities may also satisfy a portion of their compliance obligation through the purchase of offset credits (e.g., credits for GHG reductions achieved by third parties, such as landowners, livestock owners, and farmers, that occur outside of the entities’ facilities through CARB-qualified offset projects such as reforestation or methane capture projects). The Utility expects all costs and revenues associated with the GHG cap-and-trade program to be passed through to customers.
The cap-and-trade program applies to the electric generation, large industrial, natural gas, and transportation sectors. The Utility’s compliance obligation as a natural gas supplier applies to the GHG emissions attributable to the combustion of natural gas delivered to the Utility’s customers other than large natural gas delivery customers that are separately regulated as covered entities and have their own compliance obligations.
The federal administration of President Trump has led to uncertainty with regard to what further actions may occur regarding climate change at the federal level.