California's New Era of Climate Accountability
Two major California environmental laws are poised to reshape the future of the state's (and country's) economy
From Mark Twain to Joni Mitchell, there are many famous sayings about California.
One in particular that’s often proclaimed? “As goes California, so goes the nation.”
After this week’s state climate policy action, that couldn’t feel more true. In fact, one might even go a step further: “As California goes, so goes the world.”
In a vote today, CA state regulators will approve a plan to phase out the sale of gas-powered cars over the next 13 years in America’s largest automotive market. By 2035, no new gas-powered vehicles can be sold statewide.
For an economic region where consumers purchase between 1.5 - 2 million new cars per year (~15% of the entire U.S. auto market), California’s shift to 100% new electric vehicles (EVs) is impossible to ignore. It generates domestic demand that helps the EV industry and charging ecosystem scale, and it makes it clear to auto manufacturers that their product’s future is electric.
To put this shift in perspective, one year of no new gas powered cars reduces state emissions by roughly 9 million metric tons of CO2, equivalent to a total statewide GHG emissions inventory cut of around 2-3%. As new EVs replace older conventional vehicles, these annual decarbonization gains will continue to be realized year after year.
“This is monumental,” said Daniel Sperling, a member of the California Air Resources Board (CARB), “This is the most important thing that Carb has done in the last 30 years. It’s important not just for California, but it’s important for the country and the world.”
Transportation represents the largest source of CA statewide emissions (~41%), and this is a perfect example of materiality-grounded climate policy that targets the biggest opportunities for emissions improvement. More importantly, the policy doesn’t just deliver climate benefits; it’s also a public health service, providing better air quality and reducing respiratory health consequences that lead to thousands of premature deaths per year.
The new rule will be phased in over time, requiring CA reach 35% new EV sales by 2026, 68% by 2030 and 100% by 2035. It does not impact cars already on the road.
But why stop there when we’ve got a climate crisis to address? Not to be outdone, California’s also moving forward with a second major climate act: SB 260, the Climate Corporate Accountability Act (CCAA).
CCAA, as it currently stands, requires any company with over $1 billion in annual revenue doing business in CA to begin publicly reporting its annual GHG emissions, starting in 2025.
As carbon accounting becomes common practice inside organizations — particularly large enterprises — it’s forcing the economy’s largest emitters to not only take accountability for their emissions, but also ask the right internal questions, get their environmental data and strategies in order, and identify pathways to reduce their emissions.
In turn, larger companies also apply disclosure pressure on their suppliers and vendors, holding SMEs accountable as well, and ultimately encouraging emissions reporting and reduction across the supply chain.
Under CCAA, CA GHG reporting entities will need to report emissions aligned with Scope 1, 2 & 3 GHG emissions reporting standards, and independently verified their emissions disclosures via either the CA emissions registry or a third-party auditor with expertise in greenhouse gas emissions accounting.
Needless to say, if you’re at a large company that hasn’t gotten its carbon accounting in order, you’re running out of time. From the SEC and California state legislature to the UK FCA and EU CSRD & ESRS the writing is clearly on the wall: as a company you have a responsibility to count (and reduce) your carbon. The mandates are arriving, fast.
California legislators are moving quickly before their current session ends on August 31 to pass the CCAA. Our sources indicate the bill is likely to pass, and may even come up for a vote by the end of this week.
With public transportation shifting to EVs (not to mention Ebikes, scooters, electric buses, and other public transportation) and large corporations held to account for their emissions, a lot of positive California dreamin’ is poised to become a reality.
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