USA – CALIFORNIA Trends and Developments Contributed by: Nora Sheriff and Samir Hafez, Buchalter
designed to reduce statewide GHG emissions. Though often touted as a key component of the state’s climate goals, its future is uncertain, as CARB’s statutory authority over it expires in 2030. In his 2025-2026 budget proposal, California Governor Gavin Newsom called on the Leg - islature to consider extending the Cap-and- Trade Program beyond 2030 to achieve carbon neutrality. In February 2025, an intent bill was introduced, expressing the Legislature’s intent to reauthorise it through subsequent legislation. Another key bill introduced this session would authorise the California Independent System Operator and California utilities to participate in energy markets under the governance of a regional organisation. The bill supports the West-Wide Governance Pathways Initiative, which seeks to create the largest possible Western power market that includes California while minimising energy costs. Proponents of the Regional Organization bill and the broader Pathways Initiative include stakeholders from environmental, labour, utility, public power and industrial sectors. Stakeholders anticipate ben - efits from a Regional Organization ranging from improved reliability to expanded green energy opportunities to lower energy costs. The Regional Organization bill is widely seen as a top legislative priority in 2025, as it would enable the launch of a new Regional Organi - zation in time to compete with the Southwest Power Pool’s Markets+ initiative; a new Regional Organization would allow western entities to par - ticipate in a new real-time and day-ahead mar - ket. At the CPUC, regulators are working to meet the state’s decarbonisation deadlines amid a grow -
ing ratepayer affordability crisis. The CPUC is investigating how to facilitate a near-total transi - tion away from natural gas by 2045, while con - sidering strategies for hard-to-electrify custom - ers, such as low-income residential customers, industrial facilities, and energy generators. The CPUC is also considering measures and invest - ments to build the infrastructure needed to meet the state’s emissions targets. Affordability remains a central concern in these efforts, as policymakers balance the urgency of the state’s decarbonisation timeline with the need to miti - gate cost effects on consumers, or risk ratepayer backlash and diminished support for California’s climate and carbon neutrality goals. An Energy Affordability Crisis Raises the Stakes California funds many of its climate policies and initiatives through revenues collected from customer rates charged by the states’ investor- owned utilities: Pacific Gas and Electric Compa - ny, Southern California Edison Company, South - ern California Gas Company, and San Diego Gas & Electric Company. This approach has resulted in electricity rates rising faster than the pace of inflation, and faster than rates in neighbouring states. These increasingly untenable hikes risk hindering electrification efforts, delaying clean- energy investments, and driving businesses out of state, ultimately weakening California’s lead - ership in the clean-energy transition. The CPUC has adopted aggressive policies – including the Renewable Portfolio Standard (RPS) Program, Net Energy Metering, and ener - gy efficiency and demand response initiatives – to reduce reliance on fossil fuels. Additionally, the CPUC is actively exploring ratepayer-funded measures to transition the natural gas system, including initiatives to promote building elec - trification and non-gas pipeline alternatives to
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