California climate change laws form a layered system of binding targets and sector rules that together drive the state toward carbon neutrality by 2045. The framework starts with statewide emissions caps, then reaches into electricity, transportation fuels, vehicles, building construction, and corporate reporting. Each piece carries its own deadlines, compliance mechanics, and penalties.
Statewide Emissions Targets
Three laws set the overall ceiling on California’s greenhouse gas pollution. The California Global Warming Solutions Act of 2006, known as AB 32, was the first legally binding cap. It required the state to bring total emissions back to 1990 levels by 2020, a benchmark California hit four years early.1California Air Resources Board. AB 32 Global Warming Solutions Act of 2006
Senate Bill 32, signed in 2016, tightened the screws. It directs the California Air Resources Board (CARB) to cut statewide emissions to at least 40% below the 1990 level by December 31, 2030.2California Legislative Information. Bill Text – SB-32 California Global Warming Solutions Act of 2006
AB 1279, enacted in 2022, set the long-horizon targets. California must achieve carbon neutrality no later than 2045, with any remaining emissions fully offset by carbon removal, and must cut actual emissions to at least 85% below the 1990 level by that same year. The 2045 goal does not replace SB 32’s 2030 deadline. Both apply independently.3California Legislative Information. California Health and Safety Code 38562.2
Cap-and-Trade
Cap-and-trade is the backstop that holds total pollution under the statewide limit. It covers roughly 85% of California’s greenhouse gas output by regulating large emitters. Any facility that produces 25,000 or more metric tons of carbon dioxide equivalent per year must participate, which pulls in power plants, oil refineries, cement factories, and large fuel distributors.
The state issues a fixed number of allowances each year, with each allowance permitting one metric ton of emissions. Covered businesses must surrender enough allowances to match their annual output. The total supply declines over time, forcing companies to either cut pollution or pay more for a shrinking pool of permits.
Businesses obtain allowances three ways: free allocation from CARB based on industry and output, quarterly joint auctions held with Quebec, or purchases of carbon offset credits. Offset use is capped. For the 2026 through 2030 compliance period, a company can use offsets to cover no more than 6% of its total obligation, and at least half of those offsets must come from projects delivering direct environmental benefits inside California.4California Air Resources Board. Compliance Offset Program
Auction proceeds are substantial. The state forecasts cap-and-trade auction revenue of approximately $3.8 billion for the 2026–27 fiscal year, directed by statute toward manufacturing tax exemptions, high-speed rail, affordable housing, transit, wildfire resilience, community air quality, and clean drinking water.5Legislative Analyst’s Office. The 2026-27 Budget – Cap-and-Invest Expenditure Plan
Clean Electricity Requirements
The Renewables Portfolio Standard (RPS) sets the share of retail electricity sales that must come from eligible renewable sources. Public Utilities Code Section 399.11 requires 50% by the end of 2026 and 60% by the end of 2030. Eligible sources include solar, wind, geothermal, small hydroelectric, and certain biomass facilities. The requirement applies to investor-owned utilities, electric service providers, and community choice aggregators.6California Legislative Information. California Code PUC 399.11 – California Renewables Portfolio Standard Program
Senate Bill 100, passed in 2018, pushes further. It requires 100% of retail electricity sales to come from renewable and zero-carbon resources by 2045. The broader definition in SB 100 lets non-renewable but carbon-free sources, such as nuclear and large hydroelectric, count toward the goal.7California Energy Commission. SB 100 Joint Agency Report
To build enough clean capacity, the California Public Utilities Commission (CPUC) has ordered electricity providers under its jurisdiction to procure 6,000 megawatts of new clean energy and storage, delivered in 2,000-megawatt increments by June 2030, June 2031, and June 2032. Fossil fuel generation cannot count.8California Public Utilities Commission. CPUC Advances Clean and Affordable Electricity with New Procurement Decision The CPUC also sets standalone energy storage procurement targets originally established under AB 2514.9California Public Utilities Commission. Energy Storage
Low Carbon Fuel Standard
The Low Carbon Fuel Standard (LCFS) targets the carbon intensity of transportation fuels. Fuel producers and importers must progressively lower the lifecycle carbon intensity of what they sell in California, measured in grams of CO₂ equivalent per megajoule. Producers whose fuels beat the benchmark earn credits; those who exceed it must buy credits to cover the deficit.10California Air Resources Board. Low Carbon Fuel Standard
Recent updates sharpened the targets. The 2026 benchmarks drop gasoline from 84.52 to 75.16 grams of CO₂ equivalent per megajoule, and diesel from 85.38 to 80.17. The program’s endpoint is a 90% reduction in carbon intensity from 2010 levels by 2045. The LCFS credit market has become a major incentive mechanism for producers of renewable diesel, sustainable aviation fuel, and electricity used for EV charging.
Zero-Emission Vehicle Rules
California is phasing out sales of new gas-powered passenger vehicles. The Advanced Clean Cars II regulation, adopted by CARB in 2022, requires 35% of new passenger car and light-truck sales to meet zero-emission standards starting with the 2026 model year, rising to 100% by the 2035 model year. Plug-in hybrids that meet specified electric-range requirements count.11California Air Resources Board. Advanced Clean Cars II
Heavy-duty trucks face a parallel transition. The Advanced Clean Trucks regulation requires manufacturers of medium- and heavy-duty vehicles sold in California to make zero-emission trucks an increasing share of their sales. Requirements began in the 2024 model year at 5% for the largest trucks and 9% for medium-duty vehicles, escalating sharply through 2035.12California Air Resources Board. Advanced Clean Trucks Regulation Summary
Building Energy and EV-Ready Construction
Buildings consume a significant share of California’s energy, and the state’s energy code addresses that through performance-based standards rather than outright technology mandates. The 2025 California Energy Code, effective January 1, 2026, does not ban natural gas connections or require all-electric construction. Instead, it sets energy-use budgets that designers must meet, leaving technology choices to the builder.13California Energy Commission. California’s Energy Code Update Guides the Construction of Cleaner, Healthier Buildings
The practical push is still toward electrification. The updated code introduces electric-ready requirements for multifamily homes and commercial kitchens, which lowers the cost of switching water heating and cooking appliances later. New swimming pools and spas must use a heat pump or solar thermal system as the primary heat source, effectively ending gas-fired pool heaters in new construction.
The 2025 CalGreen update, also effective January 1, 2026, requires new multifamily developments to provide one EV-ready parking space per dwelling unit, with 25% of common-use parking spaces equipped with Level 2 chargers. The goal is to give apartment and condo residents practical home charging rather than forcing reliance on public networks.
Corporate Climate Disclosure
Two 2023 laws impose climate-reporting duties on large companies doing business in California, regardless of where they are headquartered. Both are the subject of active litigation, and the compliance timeline has already shifted.
SB 253 Emissions Reporting
The Climate Corporate Data Accountability Act (SB 253) applies to any business entity with total annual revenues exceeding $1 billion that does business in California. Covered companies must publicly report their greenhouse gas emissions in three categories:14California Legislative Information. California Health and Safety Code 38532
- Scope 1: direct emissions from the company’s own operations, such as fuel burned in company-owned vehicles and facilities.
- Scope 2: indirect emissions from purchased electricity, heating, and cooling.
- Scope 3: all other indirect emissions across the supply chain, including suppliers, product use by customers, and employee commuting.
Scope 1 and 2 reporting begins in 2026, with Scope 3 reporting starting in 2027. Reported data must undergo independent assurance, similar to a financial audit. CARB can impose administrative penalties of up to $500,000 per reporting year for nonfiling, late filing, or misstatements. The statute gives CARB discretion to consider good-faith compliance, and penalties for Scope 3 misstatements apply only to nonfiling through 2030.14California Legislative Information. California Health and Safety Code 38532
SB 261 Climate Financial Risk Disclosure
The Climate-Related Financial Risk Act (SB 261) applies more broadly, reaching any business entity with annual revenues over $500 million that does business in California. Covered companies must publish a biennial report disclosing their climate-related financial risks and the measures they are taking to address them. Reports must follow the framework developed by the Task Force on Climate-related Financial Disclosures (TCFD) or an equivalent standard. The maximum penalty for noncompliance is $50,000 per reporting year.15California Legislative Information. Senate Bill No. 261 – Climate-Related Financial Risk Act
Current Status and Legal Challenges
Both laws face a legal challenge brought by the U.S. Chamber of Commerce and other industry groups. In November 2025, a Ninth Circuit panel granted an injunction blocking enforcement of SB 261 while the appeal continues. CARB has confirmed that the original January 1, 2026, deadline for SB 261 reports is no longer in effect, though companies can voluntarily submit reports.
SB 253 was not directly affected by the injunction. CARB has set an initial deadline of August 10, 2026, for Scope 1 and 2 reporting. CARB’s enforcement notice from December 2024 carved out an exception: companies that were not already collecting emissions data at that time are not expected to file in 2026 and may instead submit a statement to that effect.16California Air Resources Board. FAQs Regarding California Climate Disclosure Requirements Covered companies should track both the litigation and the rulemaking, since deadlines and enforcement posture can still change.
Environmental Justice Spending Floors
Cap-and-trade revenue flows into the Greenhouse Gas Reduction Fund (GGRF), and AB 1550 sets minimum investment requirements for how that money is spent:17California Legislative Information. AB 1550 Assembly Bill – Chaptered
- At least 25% to projects located in and benefiting people living in disadvantaged communities, identified through the CalEnviroScreen tool.
- At least 5% to projects benefiting low-income households or located in low-income communities statewide.
- At least 5% to projects in low-income communities within half a mile of a designated disadvantaged community.
These floors cannot overlap. Money counted toward one category does not count toward another, so at least 35% of GGRF spending must flow to communities bearing the heaviest pollution burden. Typical uses include transit, affordable housing near jobs, community air monitoring, and clean energy installations in neighborhoods historically surrounded by industrial emissions sources. CARB is also required to identify measures in its AB 1279 scoping plan that specifically benefit disadvantaged communities.3California Legislative Information. California Health and Safety Code 38562.2