Summary of Major 2022
Climate and Energy Legislation

This post describes newly enacted legislation addressing the state’s greenhouse gas (GHG) emissions and clean energy goals, energy sources, and oil and gas extraction policies.

Background

California Has Adopted Numerous Climate Change Mitigation Measures Over the Past Two Decades. The state has undertaken a variety of innovative and ambitious steps to try to reduce the magnitude of climate change. These include establishing GHG reduction and clean energy goals. The Legislature has designated the California Air Resources Board (CARB) as the lead agency responsible for addressing GHG emissions. While CARB administers many of the state’s major climate policies, some policies are led by other state agencies. For example, renewable portfolio standards, energy efficiency programs, and other programs related to reducing emissions in the electricity sector are administered primarily by the California Energy Commissions (CEC) and the California Public Utilities Commission (CPUC).

Legislature Adopted Several New Goals and Requirements in the 2022 Session. This post describes the major climate and energy-related legislation enacted in 2022. While many of these actions were initially proposed by legislators in some form, most also were advocated for by the Governor as a package late in the 2022 legislative session. Relatedly, alongside these legislative actions, this summer CARB adopted new regulations related to zero-emission vehicles (ZEVs)—and currently is considering additional changes—to help meet the state’s GHG goals, as we describe in the nearby box. Figure 1 shows a time line summarizing the state’s major GHG emissions, electricity, and ZEV goals.

The state also approved significant new spending for climate change mitigation and alternative energy sources in the 2022-23 budget. More information on budget actions can be found in our 2022-23 California Spending Plan: Resources and Environmental Protection report.

New GHG Emission Reduction Goals

Background. The state has adopted numerous goals to reduce GHG emissions. Chapter 488 of 2006 (AB 32, Núñez) established the goal of limiting GHG emissions statewide to 1990 levels by 2020 and gave CARB regulatory authority to achieve the maximum cost-effective and technologically feasible emissions reductions. The state met the 2020 goal in 2016. Chapter 249 of 2016 (SB 32, Pavley) updated the limit to 40 percent below 1990 levels by 2030. Emissions will need to decline much faster than historical trends in order to meet this 2030 goal. Assembly Bill 32 required CARB to develop a Scoping Plan and update it at least every five years detailing the administration’s plans to meet the emissions reduction goals. The board adopted the latest plan in December 2022. (Please see our recent report, Assessing California’s Climate Policies—The 2022 Scoping Plan Update, for a discussion of this plan and the state’s progress towards the 2030 emissions reduction goal.)

Chapter 337 of 2022 (AB 1279, Muratsuchi): Requires State to Achieve Net-Zero GHG Emissions by 2045. Among other actions, AB 1279 codifies a 2018 executive order from Governor Brown that first established a statewide goal of carbon neutrality by 2045. (The terms net-zero GHG emissions and carbon neutrality have essentially the same meaning. Both mean that emissions of GHGs must be balanced by removals of GHGs through carbon sequestration, carbon capture, or other technologies. Carbon capture is explained in more detail below.) The legislation also requires the state to reduce GHGs to at least 85 percent below 1990 levels by 2045. By 2035, CARB must report to the Legislature on the feasibility and trade-offs of achieving these goals.

Chapter 368 of 2022 (SB 1203, Becker): Establishes Goal of Net-Zero Emissions From State Agency Operations by 2035. Senate Bill 1203 requires the Department of General Services (DGS) to publish an inventory of state agency GHG emissions by 2024. The legislation defines a state agency as a state agency, board, department, or commission. The legislation requires DGS, in consultation with CARB, to publish a plan no later than 2026 that includes actions and investments for how state agencies can reach the target of net-zero emissions in their operations. The plan must be updated every two years until 2035, at which point agencies are required to meet the target.

New Carbon Capture Requirements

Background. Carbon capture, utilization and storage (CCUS) technologies prevent carbon dioxide (CO2) emissions from being released into the atmosphere. Captured CO2 is typically compressed, transported by pipeline or truck, then injected into deep underground rock formations. Carbon dioxide removal (CDR) involves extracting existing CO2 from the atmosphere and storing it using similar methods as CCUS, or repurposing it into other products such as fuels or chemicals. The state has identified these technologies as an important part of efforts to achieve carbon neutrality. These technologies are developing and currently no projects are underway in California. In the 2022 Scoping Plan, CARB proposes to use CCUS and CDR as key tools to meet emissions reductions goals.

The efficacy of CCUS and CDR, however, is unclear, with recent projects in other states struggling to meet targets and facing high costs. Moreover, these processes are associated with potentially negative effects on the climate, environment, and public health. For example, because CCUS supports emissions reductions at fossil fuel refineries, it is possible that the technology could extend the life of refineries, which could work at counter purposes to the state’s climate goals. Captured CO2 can also be used to boost oil extraction in a process known as enhanced oil recovery. CCUS and CDR are energy intensive processes and existing projects have resulted in increased air pollution. Additionally, because any new California projects likely would be cited in or near exiting fossil fuel infrastructure, they could result in greater environmental and public health risks to certain neighboring communities that already are overburdened by the impacts of fossil fuel extraction and refining. Proximity to fossil fuel infrastructure is associated with respiratory issues and certain cancers due to greater concentrations of air pollutants. Moreover, research finds that these communities have comparatively higher proportions of people earning lower incomes and people of color, which raises equity concerns for the state.

Chapter 359 of 2022 (SB 905, Caballero): Requires CARB to Establish a CCUS and Removal Program. Senate Bill 905 directs CARB to establish a regulatory framework for CCUS and CDR technologies. The legislation requires CARB to develop a streamlined permitting process for projects by 2025. The permitting process must include the seismic, environmental, and air quality risks of proposed projects. CARB is also required to develop a public database tracking the deployment of CCUS and CDR projects. In addition, the legislation establishes the Geologic Carbon Sequestration Group in the California Geological Survey within the Department of Conservation (DOC). The group will provide independent expertise and guidance to CARB on safe injection sites and practices to handle captured CO2.

Chapter 336 of 2022 (SB 1314, Limón): Prevents Use of Captured CO2 in Oil Extraction. Senate Bill 1314 prohibits the use of captured CO2 in enhanced oil recovery in California, a strategy for extracting crude oil when it cannot be extracted by other technologies. Though this practice is not currently prevalent across California, captured CO2 is expected to become more widely available in the future due to increased use of CCUS technologies. Outside California it is an established industry practice. Senate Bill 1314 finds and declares that, at least as far as California is concerned, the purpose of CCUS technologies is to facilitate a transition away from the use of fossil fuels rather than provide additional means to extract fossil fuels.

New Clean Energy Portfolio Standards

Background. The state has taken a number of steps to increase sources of renewable and zero-carbon energy. Chapter 312 of 2018 (SB 100, de León) required that all electricity sales to end-use customers be zero-carbon by 2045, but it did not set interim targets. The state’s existing Renewable Portfolio Standard (RPS) sets escalating renewable energy procurement requirements for load serving entities (which include utilities that deliver electricity to customers). Qualifying sources for meeting the RPS include solar, wind, geothermal, biomass, and small hydroelectric energy. Advances in technology and deployment, notably in solar and wind, have also supported a shift away from fossil fuels and towards clean sources for electricity generation. Renewable energy supplied 36 percent of retail electricity sales in California in 2020. If we also account for energy from large hydroelectric and nuclear sources—which are considered “zero carbon” but not renewable for RPS purposes—zero-carbon sources supplied a total of 59 percent of retail electricity in 2020. Over the last decade, changes in the electricity sector have been the primary drivers of statewide GHG emissions reductions.

Chapter 361 of 2022 (SB 1020, Laird): Sets Targets on the Path Towards 100 Percent Clean Electricity Sales by 2045. Senate Bill 1020 sets interim requirements for electricity sales on the way to achieving the 2045 target established by SB 100. Specifically, the legislation requires that a combination of renewable and zero-carbon sources make up 90 percent of statewide electricity sales by 2030 and 95 percent by 2035. Additionally, the legislation requires that by 2035, renewable and zero-carbon sources must supply 100 percent of the electricity used to serve state agencies.

Health and Safety Buffers Near Oil and Gas Wells

Background. There are more than 240,000 oil and gas wells in California. The California Geologic Energy Management Division (CalGEM), the entity within DOC that supervises California drilling, estimates that about 100,000 wells currently are active, and of these, about 30,000 are located within 3,200 feet of a community site—including schools, nursing homes, hospitals, churches, and youth centers. A total of 5.5 million Californians live within a mile of one or more oil or gas wells, and 2.7 million Californians live within 3,200 feet of a well. Living near oil and gas wells increases exposure to air pollutants that are known to worsen health outcomes. Specifically, proximity to wells is associated with a greater risk of asthma, preterm births, respiratory disease, and certain cancers. Of the Californians who live within a mile of a well, 92 percent are people of color. This aligns with the aforementioned historic patterns of communities that are made up of higher proportions of lower-income and people of color being overburdened by fossil fuel production. Of the wells that received state permits since 2011, 76 percent are located in communities with above-average poverty rates. California does not currently have setback or buffer requirements for development near oil and gas wells. CalGEM began a process to update its health and safety protections for communities near oil and gas production in 2020. As part of this process, CalGEM released a draft rule proposing a setback of 3,200 feet between new wells and community sites in 2021, but the division has not yet adopted it as a regulation.

Chapter 365 of 2022 (SB 1137, Gonzalez): Establishes a 3,200 Feet Buffer Between New Oil and Gas Wells and Certain Community Sites. Apart from some limited exceptions, SB 1137 prohibits CalGEM from approving new wells within 3,200 feet of schools, hospitals, nursing homes, youth centers, and other sites which the legislation defines as “sensitive receptors.” This codifies the major change from the proposed CalGEM regulation and adds some additional requirements. Specifically, well operators must submit an inventory map of sensitive receptors within 3,200 feet of any new proposed drilling site. Existing wells within this radius, defined as a health protection zone, must implement air and water pollution controls, and CalGEM must rework existing permits to ensure compliance. Underground gas storage wells are exempt from the legislation’s requirements. Senate Bill 1137 is being challenged by a potential voter referendum, and will not go into effect unless or until the referendum fails to qualify for the ballot and/or statewide voters vote to uphold the law. (At the time of this writing, proponents of the referendum to repeal SB 1137 had collected and submitted signatures to the Secretary of State, and a decision about whether it has qualified for the November 2024 statewide ballot was still pending.)

Extended Operations at Diablo Canyon Power Plant

Background. The Diablo Canyon Power Plant (DCPP), owned and operated by the Pacific Gas and Electric Company (PG&E), is California’s last operating nuclear power plant, containing two large units. DCPP was scheduled for closure by 2025 due to safety and environmental concerns such as seismic risk and challenges in disposing of nuclear waste. However, DCPP provides a non-GHG-emitting energy source as the state seeks to limit GHG emissions. Moreover, the plant helps the state meet rising energy demands due to increasing temperatures (resulting from climate change) and a shift to greater electrification. Growth in solar and wind technologies is partially supporting the state’s energy needs and climate goals, but storage capacity is limited and statewide energy demand can still strain supply during certain parts of the day and year. While DCPP supports the reliability of the state’s electric grid, it is expensive to maintain, and the safety and environmental concerns that spurred the state’s initial plans to close the plant still are present.

Chapter 239 of 2022 (SB 846, Dodd): Authorizes Extension of Operations for DCPP to 2030. Extending DCPP’s operations was initially proposed by the Governor through budget trailer legislation for 2022-23. The Legislature ultimately modified the proposal, which passed as a standalone policy bill. The legislation requires CPUC to set new retirement dates no later than 2029 for unit 1 and 2030 for unit 2. It also requires CEC and CPUC to deliver a joint Reliability Planning Assessment to the Legislature by December 15, 2022, and quarterly thereafter. This assessment should include estimated electricity demand and supply balance for future years under different risk scenarios. The legislation also requires CEC, in consultation with CPUC and the California Independent System Operator, to adopt load shifting goals to reduce net peak electrical demand. It also directs CPUC to continue funding and administering the existing Independent Safety Committee for Diablo Canyon.

Authorizes a Loan to PG&E of Up to $1.4 Billion to Maintain Operations. The legislation authorizes the state to loan up to $1.4 billion for maintained DCPP operations. Specifically, SB 846 allows the Department of Finance to loan up to $600 million from the General Fund in 2022-23 to a new Diablo Canyon Extension Fund administered by the Department of Water Resources (DWR). DWR is authorized to loan these funds to PG&E for costs related to extending the use of DCPP to 2030. Of the $1.4 billion total, the remaining $800 million not appropriated in SB 846 is subject to future appropriation by the Legislature. At the state’s direction, PG&E pursued funds to repay the loan from the federal Civil Nuclear Credit Program administered by the U.S. Department of Energy, and the utility was awarded a $1.1 billion grant in November 2022. This will allow the utility to pay the state back for most of the authorized General Fund loans.

Potential Future Funding for Clean Energy Reliability and Land Conservation. Senate Bill 846 also includes language expressing legislative intent to provide a total of $1 billion from the General Fund from 2023-24 to 2025-26, subject to appropriation, to support a Clean Energy Reliability Investment Plan to be developed by CEC. This plan is due to the Joint Legislative Budget Committee by March 2023. The legislation requires that the plan support investments that address near- and mid-term reliability needs and the state’s GHG and clean energy goals. Senate Bill 846 includes additional intent language to provide $10 million in 2023-24 and $150 million in 2024-25 from the General Fund, subject to appropriation, to fund implementation of a Land Conservation and Economic Development Plan to be developed by the California Natural Resources Agency that would support environmental enhancements, access to DCPP lands, and local economic development consistent with the updated decommissioning time line.

Conclusion

The Legislature set ambitious new goals, accelerated existing targets, and adopted new policies in its 2022 climate and energy actions. However, enacting these bills was only the first step in achieving the Legislature’s ultimate objectives. Meeting these goals and carrying out the wide-ranging new policies will necessitate an intensive and sustained effort across state government. We recommend that the Legislature carefully monitor state departments’ progress on implementing the new legislation and be prepared to take additional action if the state is appearing to fall short of meeting its targets and intended outcomes. Moreover, higher temperatures due to climate change, greater use of ZEVs, and other electrification efforts will continue to create additional demands on the electric grid. As the state looks to shore up grid reliability and achieve its emissions reduction targets, additional actions may be needed to ensure the state has the energy supply resources it needs. We recommend the Legislature closely review the two reports required by SB 846—the Clean Energy Reliability Investment Plan (due by March 2023) and the Joint Reliability Assessment (submitted in December 2022)—to assess the administration’s plans to strengthen grid reliability and clean energy investments and see what follow up may be warranted.