California’s new 2023-‘24 legislative session is underway. About 300 bills have been introduced thus far, with another 2,000 expected by the February 17th deadline to introduce bills for the first year of the legislative session.

This has become the norm. Climate change is one of the top issues for this session along with homelessness, affordable housing, oil tax, and the budget. After having a record budget surplus of $97 billion over the last two years, the state is facing a $22.5 billion budget shortfall in 2023. If the state goes into a moderate recession this year, that budget shortfall could reach $40 to $60 billion.

As of this writing, the governor and legislature are taking the approach of reducing program costs across the board. However, if the deficit balloons with any kind of economic downturn, the budget writer will have to turn to individual cuts to specific programs.

One of the most controversial issues this session is a proposed tax on oil company’s profits and moving the state away from fossil fuels, including natural gas. A substantial budget deficit would likely slow down the state’s progress toward replacing fossil fuels. The legislature has set various greenhouse gas goals. The legislature has adopted three successive statewide GHG emission reduction goals (also known as targets):

• 2020. Chapter 488 of 2006 (AB 32, Nunez/Pavley) establish the goal of limiting GHG emissions statewide to the 1990 level by 2020.

• 2030. Chapter 249 of 2016 (SB 32, Pavley) extended the limit to at least 40% below the 1990 level by 2030.

• 2045. Chapter 337 of 2022 (AB 1279, Muratsuchi) extended the limit to at least 85% below the 1990 level by 2045. Assembly bill 1279 also established a goal of zero net carbon emissions by 2045, commonly known as carbon neutrality.

The California Air Resources Board (CARB), in concert with the Energy Commission and the Public Utilities Commission, is tasked with developing a plan for the state to reach these goals. However, in a recent report, the state’s legislative analyst stated that California’s plan to attack climate change is not really on track.

Plan lacks a clear strategy for meeting 2030 GHG goals. According to the Legislative Analyst’s report, despite the significant reductions needed to meet these goals, CARBs plan does not identify which specific policies it will implement. For example, the plan is unclear regarding how much the state will rely on financial incentives, sector-specific regulatory programs, or cap-and-trade. Rather, the plan’s estimated reductions are driven primarily by assumptions developed by CARB, without specifying how those assumed outcomes might be achieved. The lack of focus on policy options is a missed opportunity that has important ramifications for California’s overall GHG reduction efforts, including:

• The lack of specificity likely will lead to delayed action, as it defaults to state departments to identify necessary implementation steps. This increases the risk that the state will not meet its statutory 2030 GHG goal, much less CARB’s more ambitious target.

• If the state needs to adopt policy changes in a relatively short period of time to meet its goal, this could be costlier and/or disruptive for private businesses and households.

• The plan does not provide the legislature with sufficient information — such as about cost effectiveness, distributional impacts, or other environmental impacts — to evaluate the merits of new policies that might be needed to meet the 2030 goal.

• Failing to develop a credible plan to meet statewide GHG goals could adversely affect California’s ability to serve as an effective model for other jurisdictions or demonstrate global leadership.

This report comes at a time where the legislature is considering bills to accelerate these goals by increasing the percentage increase in greenhouse gas reductions. From a California Pool and Spa Association standpoint, the lack of a clear strategy will delay moves by the state and the building standards commission to move to all-electric homes in the near future.

This will elongate the ability of the pool and spa industry to continue to use natural gas water heating as the preferred method of heating pools and inground spas.