USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Elisa Rivas, Buchalter
of microgrid systems. The CPUC rejected these proposals on the grounds that they did not con- form to existing statutory obligations (such as Public Utilities Code Section 218, which limits “over the fence” energy delivery by non-utilities) and guiding regulatory principles, including pre- venting cost shift. Adoption of 2025 Building Energy Efficiency Standards On 11 September 2024, the CEC adopted the 2025 Building Energy Efficiency Standards for newly constructed, renovated buildings, and for certain other existing buildings, effective 1 Janu- ary 2026. These new standards include updates to solar and storage standards for assembly buildings, and other updates that will influence energy consumption in new constructions and major renovations. 1.7 Announcements Regarding New Policies There have been several new policies and initia- tives that would result in material changes for the power industry in California. Federal Policies In early 2025, President Donald Trump issued a series of Executive Orders (EOs) targeting aspects of the Inflation Reduction Act (IRA) (2022), particularly certain clean energy tax credits, and directing the Environmental Protec- tion Agency (EPA) to reconsider regulations for power plants, including emissions and waste- water standards issued in 2024. These efforts, in addition to potential tariff changes, introduce considerable uncertainty for renewable energy project development, supply chains and long- term compliance planning for fossil fuel genera- tors nationwide.
On 22 May 2025, the House of Representatives passed HR 1, the federal budget bill, proposing drastic and accelerated curtailments to the IRA’s clean energy tax credits; the Senate is expect- ed to take up the budget bill in early June, and its passage is expected this summer. The bill’s modifications to the IRA incentives threaten to significantly hinder investments in utility-scale renewable energy projects needed to achieve California’s decarbonisation goals. Already, industry analysts are forecasting wind and solar installations to drop by half by 2035; the prices for power may rise over this time period as well. Governor Gavin Newsom’s EO N-5-24 On 30 October 2024, Governor Gavin Newsom signed EO N-5-24 directing the CEC and CPUC to re-examine the efficacy of existing electric ratepayer-funded programmes. The EO also directed the agencies to identify programmes that might be more appropriately funded from non-ratepayer sources. This order was a direct response to rising ratepayer affordability con- cerns in California. Implementation of Climate-Related Disclosures On 5 December 2024, CARB announced that it is developing the California Corporate Greenhouse Gas Reporting Program, authorised by SB 253 (2023). This programme will require companies with total annual revenues in excess of USD1 billion that do business in California to submit annual reports disclosing all of their Scope 1, Scope 2 and Scope 3 GHG emissions, begin- ning in 2026. Governor Gavin Newsom’s EO N-79-20 EO N-79-20 (23 September 2020) establishes California’s goal that 100% of in-state sales of new vehicles be zero-emission by 2035, and that 100% of medium- and heavy-duty vehicles
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