In the closing weeks of 2022, the California Air Resources Board (“CARB” or “Board”) approved its final 2022 Scoping Plan, which sets forth a detailed roadmap to accelerate the reduction of greenhouse gas (“GHG”) emissions in order for the state to achieve carbon neutrality by 2045, with an interim goal of achieving a reduction in GHG emissions of 40% below the 1990 level by 2030 (the goal adopted by the State in 2017’s SB 32).

Under AB 32, the 2006 landmark legislation, CARB is required to update the Scoping Plan every 5 years, but the 2022 Scoping Plan is its most comprehensive and ambitious plan to date. The 2022 Scoping Plan, which CARB describes as “unprecedented in scale and scope,” memorializes CARB’s planning efforts over the past 2 years, including meetings, workshops and presentations, and input from the Board, the Environmental Justice Committee, the Governor’s Office and members of the public.

In an earlier draft of the Scoping Plan, CARB outlined alternative scenarios to achieve carbon neutrality by 2035 and 2045; it chose the 2045 scenario in June. Later in the summer the State adopted a host of new climate laws, including AB 1279, which adopted the 2045 carbon neutrality goal and as well as a target reduction in anthropogenic GHG emissions of 85% below 1990 levels. The final version of the Scoping Plan made changes to bring it into line with the new legislation.

Unlike previous scoping plans, the 2022 Scoping Plan approaches decarbonization from 2 perspectives – (i) managing a phasedown of existing energy sources and technology and (ii) developing and deploying alternative clean energy sources and technology throughout time.

In particular, the 2022 Scoping Plan proposes the following goals to decrease reliance on existing energy sources and technology to accomplish carbon neutrality no later than 2045, including:

  • Per AB 1279, by 2045 reduce GHG emissions by 85% below 1990 levels and achieve carbon neutrality, and per SB 32 by 2030 reduce GHG emissions 40% below 1990 levels (though its models suggest it will achieve a 48% reduction by 2030);
  • Achieve a 71% reduction in smog-forming air pollution; and
  • Reduce total fossil fuel consumption by 86% of present-day levels (with a 94% reduction in liquid petroleum fuel consumption).

To accomplish these objectives, the 2022 Scoping Plan also sets forth the following technologically feasible and cost-effective initiatives that will impact nearly every industry sector in California, including deploying clean technologies, fuels and energy sources, and increased support for sustainable development.

Clean Technologies and Fuels:

To accelerate the reduction and replacement of fossil fuels, the Plan proposes to incentive private investment in new zero-carbon and low-carbon fuels and other technologically feasible and cost-effective clean technologies.

For example, the Scoping Plan proposes investing in infrastructure that supports reliable refueling for transportation (e.g., electricity and hydrogen refueling) where non-combustion alternatives are currently unavailable. In particular, the Scoping Plan anticipates providing capacity credits for hydrogen and electricity for heavy-duty fueling and also recommends leveraging low-carbon hydrogen programs, including the Bipartisan Infrastructure Law, for regional hydrogen hubs, hydrogen electrolysis, and hydrogen manufacturing and recycling.

The Plan also supports evaluating the role of hydrogen to promote cost-effective, low-carbon fuels for hard-to-electrify industrial applications. Under the Plan, incentives for low-carbon-intensity fuels would be increased by proposing accelerated carbon intensity targets for the Low Carbon Fuel Standard (“LCFS”) program prior to 2030, and evaluating further declines after 2030. CARB clarified that it would monitor raw materials used to produce low-carbon fuels or technologies to prevent any unintended consequences.

In an effort to ensure a smooth transition away from fossil fuels, the Plan proposes to quadruple the State’s current wind and solar capacity. In particular, the Plan calls for significant development to access out-of-state and offshore wind, with a projected 20-gigawatt increase of offshore wind capacity, and about 10 gigawatts of additional solar capacity.

Relatedly, the Scoping Plan endorses developing infrastructure for Carbon Capture and Sequestration (“CCS”) technologies that capture carbon from emitting facilities and directly from the atmosphere to be used or “sequestered” permanently. The Plan proposes increased development of infrastructure for CCS on natural and working lands, and supports developing unified requirements to ensure safety and effective deployment of CCS technologies.

Sustainable Development for Buildings and Transportation:

Additionally, the Scoping Plan adopts specific goals to encourage sustainable development and reduce emissions in the construction and transportation sectors. This component of the Scoping Plan prioritizes incentive programs that focus on the holistic retrofitting of existing buildings, especially affordable and low-income households, to replace fossil fuel appliances with electric appliances, energy-efficient lighting, and building insulation and sealing. Along these same lines, the Scoping Plan proposes achieving three million all-electric and electric-ready homes by 2030 (seven million by 2035) with six million heat pumps installed statewide, and ending the expansion of fossil gas infrastructure and capacity for newly constructed buildings.

Similarly, the Plan proposes investment and innovation incentives in the transportation sector in order to develop and commercialize zero-emission equipment that meets or exceeds the performance of existing equipment, with the goal of achieving 100% zero-emissions sales of light-duty vehicles by 2030 and medium- and heavy-duty vehicles by 2040, and a 20% zero-emission target for the aviation transportation sector. The Scoping Plan also sets forth objectives to achieve the recommended per-capita vehicle miles traveled (“VMT”) reduction of at least 25% below 2019 levels by 2030 (30% by 2045).

* * * *

In sum, by rapidly shifting away from all fossil fuels and then reaching carbon neutrality, the 2022 Scoping Plan seeks to provide significant business opportunities throughout the state while also delivering public health benefits to everyone in California, particularly more vulnerable populations. Notably, implementation of the Scoping Plan is projected to create a total of 4 million new jobs in California, including green jobs tied to electric vehicle and zero-emission truck manufacturing, and is projected to save Californians approximately $200 billion in healthcare costs related to pollution. 

As the Plan acknowledges, implementation of the Scoping Plan will likely require new regulatory programs and additional state-level rulemaking and legislation. Therefore, for the 2022 Scoping Plan to achieve its goals for carbon-neutrality as intended, it will be imperative that local governments, businesses, and other relevant agencies work collaboratively.

Undertaking new state-level legislation will be challenging, as the Scoping Plan has many critics in the Legislature. In January, the State’s Legislative Analyst’s Office (the “LAO”) issued a report that was harshly critical of the Scoping Plan. (See here.) Its criticisms focus primarily on the Plan’s approach to achieving the 2030 goals. The LAO calls upon CARB to clarify that approach with greater detail, and it calls upon the Legislature to adopt legislation to increase the stringency of the Cap-and-Trade Program, which, while but one facet of CARB’s strategy, is the centerpiece of its climate strategies. Specifically, the LAO and many prominent legislators call for a significant reduction in the number of allowances. That is a debate that has been raging for the last few years, and appears likely to intensify in 2023, quite possibly in the form of proposed legislation.