California Legislative Report: Climate and Affordability Policies Aligned with Sustainable Development Goals

Cap and Invest Program Extension to 2045

Advancing SDG 13 (Climate Action) and SDG 7 (Affordable and Clean Energy)

California has reauthorized its primary climate policy, extending the state’s carbon pricing program through 2045. The initiative has been rebranded from “cap and trade” to “cap and invest” to emphasize the revenue-generating aspects that fund climate projects and consumer relief, directly supporting progress toward multiple Sustainable Development Goals (SDGs).

• The extension provides long-term certainty for industries, encouraging investment in decarbonization technologies and infrastructure, which is crucial for achieving SDG 13 (Climate Action).
• The program requires polluting industries to purchase allowances for carbon emissions, with the total number of allowances decreasing over time to ensure emission reductions.
• Revenues generated are allocated to climate-friendly projects and utility bill credits for consumers.

Policy Reforms and SDG Implications

1. Targeted Utility Credits: To advance SDG 7 (Affordable and Clean Energy), program revenues designated for utility credits will be directed exclusively to electricity bills by 2031. This measure is designed to lower the cost of electricity, incentivize the transition from gas to electric appliances, and support building decarbonization without removing financial support from customers.
2. Carbon Offset Integrity: The reform addresses the effectiveness of carbon offsets. For every offset a company uses for compliance, the state will now retire a corresponding emissions allowance. This change strengthens the program’s environmental integrity and ensures more verifiable emissions reductions in line with SDG 13.
3. Affordability and Equity Concerns: Despite measures to lower electricity bills, concerns remain regarding the program’s impact on overall affordability, particularly gasoline prices. This highlights a potential conflict with SDG 1 (No Poverty) and SDG 10 (Reduced Inequalities), as rising costs could disproportionately affect low-income communities. Further regulatory action may be needed to balance climate ambition with consumer cost impacts.

Development of a Coordinated Western Electricity Grid

Fostering Regional Cooperation for SDG 7 and SDG 17

Legislation has been passed authorizing California’s grid operator (CAISO) to collaborate with other Western states to create an integrated regional electricity market. This initiative aims to enhance the delivery of clean energy, improve grid reliability, and lower costs for consumers across the region.

• The primary objective is to create efficiencies through competition and coordination, allowing for better management and distribution of renewable energy resources.
• This regional partnership is a direct application of SDG 17 (Partnerships for the Goals), leveraging interstate cooperation to achieve shared climate and energy objectives.
• A coordinated grid will enable California to export surplus solar energy and import power during periods of high demand, improving grid stability and advancing SDG 7.

Governance and Infrastructure for Sustainable Energy

1. Independent Governance: The legislation allows for the transition of market governance to an independent, regional entity. This move is critical for encouraging participation from other states that were hesitant to join a market controlled by a single state’s governor, thereby fostering a more robust and equitable partnership.
2. Enhanced Renewable Energy Integration: A larger, more transparent market facilitates the development and integration of clean energy projects. This supports SDG 9 (Industry, Innovation, and Infrastructure) by creating a modern, resilient, and sustainable energy infrastructure capable of managing variable renewable sources.
3. Coordinated Transmission Planning: The regional organization will enable more coordinated planning for transmission upgrades, a key factor in reducing costs and accelerating the transition to a decarbonized power system.

Wildfire Fund Replenishment and Electricity Cost Mitigation

Strengthening Resilience and Affordability (SDG 11 & SDG 7)

To address the financial risks posed by climate-driven wildfires, the legislature has extended a fee to replenish the state’s Wildfire Fund. This action aims to ensure utility solvency and community resilience while introducing measures to mitigate the cost burden on ratepayers.

• An additional $18 billion will be added to the Wildfire Fund over the next decade, with the cost shared between ratepayers and utility shareholders.
• This fund acts as an insurance mechanism, contributing to SDG 11 (Sustainable Cities and Communities) by protecting critical infrastructure and preventing utility insolvency following catastrophic events.
• Several new measures were passed to offset the cost of the fee and control future rate increases.

Key Cost-Saving and Infrastructure Measures

1. Profit Limitation on Mitigation Projects: Utilities will be prohibited from earning a profit on the first $6 billion they spend on wildfire mitigation efforts, such as burying power lines. This measure directly supports SDG 7 by ensuring that essential safety upgrades do not lead to excessive costs for consumers.
2. Public Financing for Transmission: A “Transmission Infrastructure Accelerator” will be established to provide public financing options, including low-cost loans and revenue bonds, for new transmission projects. This initiative, funded by cap and invest revenue, will lower the cost of building critical infrastructure needed for the energy transition, aligning with SDG 9 and SDG 7.

Controversial Measures on Fossil Fuel Production

Balancing Energy Affordability with SDG 13 (Climate Action)

In a move that has drawn criticism, the legislative package includes a bill to streamline the approval of new oil wells in Kern County. The stated purpose is to stabilize gasoline prices and prevent the closure of in-state refineries, highlighting the complex trade-offs between immediate economic concerns and long-term climate goals.

• The provision streamlines drilling permits through 2036 as a short-term measure to address energy price volatility.
• This policy presents a direct conflict with SDG 13 (Climate Action), as it promotes the expansion of fossil fuel production.

Analysis of SDG Conflicts and Just Transition

1. Tension with Climate Goals: While justified as an affordability measure, increasing in-state oil production undermines California’s efforts to phase out fossil fuels. This illustrates the challenge of managing a just transition, as outlined in SDG 8 (Decent Work and Economic Growth), where short-term economic stability is weighed against long-term environmental sustainability.
2. Questionable Efficacy: Analysts question whether increased drilling will significantly lower gasoline prices, which are heavily influenced by taxes, environmental fees, and global market dynamics. The policy may not effectively address the root causes of high fuel costs, while simultaneously compromising climate targets.
3. A Temporary Solution: Proponents view the measure as a way to buy time to implement more sustainable, long-term solutions, such as increasing the capacity to import refined gasoline. However, this approach risks delaying the necessary investments in clean transportation and renewable energy infrastructure.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 7: Affordable and Clean Energy

  The article extensively discusses California’s efforts to manage electricity costs, promote clean energy, and create a more integrated and efficient Western electricity market. This includes lowering electricity bills through the “cap and invest” program, developing a coordinated Western grid to deliver “cleaner energy throughout the region at lower cost,” and financing new transmission lines.

• SDG 9: Industry, Innovation, and Infrastructure

  The development of resilient and sustainable infrastructure is a key theme. The article highlights the creation of a “Transmission Infrastructure Accelerator” to finance new transmission lines and the push to create a coordinated Western grid, which represents a significant upgrade to regional energy infrastructure.

• SDG 11: Sustainable Cities and Communities

  The article touches upon making communities more resilient and sustainable. This is evident in the discussion of the state’s Wildfire Fund, designed to protect communities from the financial and physical fallout of wildfires. Additionally, it mentions proposed bills for denser housing near public transit and setting maximum indoor temperatures, which relate directly to sustainable urban living and climate adaptation.

• SDG 13: Climate Action

  This is the central theme of the article. The reauthorization and extension of California’s “cap and invest” program through 2045 is a primary policy tool to combat climate change by putting a price on carbon emissions. The entire package of legislation is framed as an attempt to “advance their climate goals.”

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 7: Affordable and Clean Energy

• Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix. The article supports this target by describing the creation of a Western grid that would allow California, which “often produces more solar energy than it can use during the day,” to sell that clean power to other states, thereby increasing the overall use of renewable energy in the region.
• Target 7.b: By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all. The legislation giving California’s grid operator the “blessing to work with other states in the region on creating such a market” and the creation of a “Transmission Infrastructure Accelerator” are direct actions to expand and upgrade energy infrastructure for more sustainable services.

SDG 9: Industry, Innovation, and Infrastructure

• Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being, with a focus on affordable and equitable access for all. The article details plans for a “Transmission Infrastructure Accelerator” to develop public financing for new transmission lines and mentions utilities spending on wildfire mitigation projects like “burying power lines,” which are efforts to build more resilient and sustainable infrastructure.

SDG 11: Sustainable Cities and Communities

• Target 11.5: By 2030, significantly reduce… direct economic losses… caused by disasters… with a focus on protecting the poor and vulnerable. The extension of the state Wildfire Fund, which helps “utilities cover post-wildfire loss and damage claims,” is a direct measure to mitigate the economic losses from climate-related disasters and prevent utility insolvency, thereby protecting communities.
• Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing. The article mentions a bill that would “allow taller, denser housing to be built near public transit,” which is a strategy aimed at increasing the supply of housing in accessible locations.

SDG 13: Climate Action

• Target 13.2: Integrate climate change measures into national policies, strategies and planning. The extension of California’s “cap and trade program” (rebranded as “cap and invest”) through 2045 is a clear example of integrating a major climate change mitigation measure into long-term state policy and strategy.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

For SDG 7 (Affordable and Clean Energy) & SDG 9 (Industry, Innovation, and Infrastructure)

• Number of utility participants in the regional electricity market: The article states that the extended day-ahead market will initially have “just two participants… with five others planning to join in later years.” Tracking the growth in the number of participants is a direct indicator of progress in creating an integrated Western grid.
• Investment in infrastructure: The article specifies that “$18 billion” will be added to the Wildfire Fund over the next decade. It also notes that utilities will be prohibited from earning a profit on the “first $6 billion they spend on wildfire mitigation projects.” These financial figures serve as direct indicators of investment in resilient infrastructure.
• Financial savings from infrastructure projects: The new transmission lines are projected to generate “$3 billion in savings per year once constructed,” providing a clear metric for measuring the affordability impact of the infrastructure investment.

For SDG 13 (Climate Action)

• Price and quantity of carbon allowances: The “cap and invest” program functions by setting a “declining amount of allowances released into the market each year.” The number of allowances issued is a direct measure of the emissions cap. The article also mentions the price of allowances (“Right now prices are around $30”) and a price ceiling of $95, which are indicators of the program’s economic impact and stringency.
• Program revenue and allocation: The article notes that uncertainty in the program’s future “cost the state $3.6 billion in revenues.” Tracking the revenue generated from allowance sales is an indicator of the program’s scale. The policy change directing these funds “exclusively toward electric bill savings” is another measurable outcome.

For SDG 11 (Sustainable Cities and Communities)

• Funding for disaster resilience: The article states that the legislature is “adding $18 billion to the Wildfire Fund” over the next decade, split between ratepayers and shareholders. This is a specific, quantifiable indicator of financial commitment to disaster resilience.

4. SDGs, Targets, and Indicators Table

Source: heatmap.news