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March 13, 2025

California's Energy Transition Strategy

Carbon Watch

Has California made measurable progress over the last couple of decades through its climate-related policies while growing its economy? The answer is a resounding yes. Have environmental commodities played a large role as California transitions to clean energy? Again, another resounding yes.

The State’s proactive approach to environmental initiatives — such as renewable electricity, renewable fuels, energy efficiency and battery storage — has significantly reduced greenhouse gas (GHG) emissions. In fact, California has been so successful at reducing GHG emissions that it easily achieved the legally-binding target of achieving 1990 level emissions by 2020 four years ahead of schedule.1 It is widely expected that California will also meet or exceed the current statutory requirement that calls for achieving 40% decline in GHG emissions below 1990 levels by 2030.

Why does this matter? As the 5th largest economy in the world, other jurisdictions are paying attention to California’s energy transition policies. With well over 20% of the globe under some version of carbon pricing,2 California has demonstrated a global leadership role in the clean energy transition while growing its economy and continuing to be the center of global innovation and technology.

California leads the nation in clean energy jobs, with over 544,000 individuals working across renewable energy, energy efficiency, and clean transportation roles, with the bulk of the workforce in construction and professional services. In 2023, there were 7 times more clean energy jobs than fossil fuel jobs in California.3

California GHG Emissions & GSP Change Since 2000
(Source: California Air Resources Board)
CA GSP GHG

Programs like the Low Carbon Fuel Standard (LCFS) that generate valuable LCFS credits from the production of clean fuels, the Cap-and-Trade program that requires large emitters of GHG emissions to purchase California Carbon Allowances (CCAs), and the Renewable Portfolio Standard (RPS) that requires increasing amounts of renewable electricity that generate meaningful revenues for producers via sales of Renewable Energy Certificates (RECs) have been instrumental in driving this climate and economic progress.

We analyzed the results behind California’s energy transition to date by more closely examining the different elements of California’s current energy infrastructure and how the State’s related policies have driven significant progress toward GHG reduction targets.


Renewable Electricity: A Majority-Clean Grid


California’s commitment to clean energy is evident in the transformation of its electricity grid. Currently, 61% of the state’s electricity comes from renewable sources, and in just the past six years, 27 gigawatts of clean energy capacity have been added. In 2024 alone, there were 219 days when the California Independent System Operator (CAISO) operated on 100% clean energy for at least part of the day.4 These milestones underscore the effectiveness of California’s policies in fostering a renewable-powered future. Here is the breakdown of California’s renewable energy sources:

· Utility-scale solar (photovoltaic and thermal): 18.3%
· Wind power: 6.5%
· Geothermal energy: 5.1%
· Biomass: 2.3%
· Hydropower (large and small): 15%

California’s RPS has certainly incentivized the adoption and development of these energy sources by incentivizing the growth of renewable electricity in California. The RPS mandates that utilities procure 60% of their electricity form eligible renewable energy sources by 2030 and requires achieving 100% clean energy by 2045.

Battery Storage: A Game-Changer for the Grid


Battery storage is crucial for balancing intermittent energy sources like solar and wind as it enables surplus electricity to be stored during periods of low demand and dispatched during peak times. Over the past five years, California’s battery storage capacity has surged, growing more than fifteenfold from 770 megawatts (MW) in 2019 to 13,391 MW as of October 2024.5 To put that into perspective, this figure represents approximately 28% of California’s peak energy demand in 2024. Most of this storage capacity is utility-scale, supplemented by residential (1,354 MW) and commercial (576 MW) storage. The rapid acceleration in deployment underscores California’s commitment to grid stability and renewable energy integration. Looking ahead, California aims to achieve 52,000 MW of installed battery storage by 2045.


EV Charging Infrastructure: Paving the Way for a Greener Transportation Sector


The past four years have seen California’s electric vehicle (EV) charging network more than double. By late 2024, the state had approximately 18,224 public charging stations. Moreover, there are over 150,000 public and private charging plugs – more than the total number of gasoline nozzles available statewide.6 This expansion is aided by policies like the LCFS and Cap-and-Trade programs, which have incentivized infrastructure development and made EV adoption more feasible for Californians. Specifically, the LCFS program provides incentives for the production of clean fuels that generate LCFS credits that are purchased by obligated parties that generate deficits (generally producers of gasoline and fossil diesel). Further, the revenues from the Cap-and-Trade program’s auctions (which have raised close to $35 billion since inception) fund projects like EV chargers across the state via its Greenhouse Gas Reduction Fund.7


Renewable Diesel: The Rise of Renewable Fuels


Renewable Diesel has played a significant role in reducing GHG emissions in the transportation sector over the last few years as it is a drop-in replacement for traditional diesel that requires no modifications to existing engines or storage infrastructure. Derived from feedstocks like used cooking oil and virgin crops such as soy and canola, renewable diesel has made a rapid impact due to the incentives provide by the LCFS program. By the third quarter of 2024, renewable diesel accounted for 65% of all diesel fuel used in transportation in California, with biodiesel contributing another 5%.8 This shift has drastically reduced emissions in the heavy-duty vehicle sector, a key contributor to GHG output.


GHG Emissions: Tangible Progress with Ambitious Goals Ahead


The cumulative impact of California’s climate policies is clear: California easily achieved its initial target of reducing GHG emissions to 1990 levels by 2020 and is on track to meet its next milestone towards ultimately achieving carbon neutrality by 2045. While energy transition policies will always have their challenges, the energy transition trend is undeniable. California is well-positioned to achieve its long-term decarbonization goals. We believe that the state’s policymakers and regulatory bodies remain committed to building upon this success, irrespective of the noise that often drowns out the quiet progress being made.

Sources
1. California Air Resources Board (https://ww2.arb.ca.gov/).
2. World Bank (WorldBank.org).
3. Clean Jobs America E2 (https://cleanjobsamerica.e2.org/#maps).
4. “California exceeds another clean energy milestone.” California Governor Gavin Newsom, Oct 15, 2024. <link>.
5. Ciampoli, Paul. “California Battery Storage Capacity Expands Rapidly.” Public Power, Oct 21 2024. <link>.
6. Muller, Joann et al. “It’s getting easier to charge your EV across California.” Axios, Jan 27 2025. <link>
7. California Climate Investments (https://www.caclimateinvestments.ca.gov/).
8. Paz, Cassia. “Renewable Diesel Consumption in California Continues to Grow.” Mansfield Energy, Mar 3 2025. <link>.