Governor directs Department of Finance to create a Climate Investment Framework to leverage the state’s $700 billion CalPERS, CalSTRS and UC Retirement Program portfolio to drive investment toward carbon-neutral technologies
Governor Newsom also signs legislation strengthening the state’s emissions standards and establishing the nation’s first “smog check” for diesel trucks
SACRAMENTO – Just days before global leaders converge in New York City for Climate Week and months after California struck a major agreement with four automakers on vehicle emission standards, Governor Gavin Newsom today signed a landmark executive order to leverage the state’s $700 billion pension investment portfolio and assets to advance California’s climate leadership. The executive order also directs multiple state agencies and departments to review and update overall operations, transportation investments, and use of the state’s purchasing power to advance groundbreaking climate goals.
The Governor also signed two important bills today to strengthen emission standards for trucks, semis and other high-pollution vehicles. SB 210 by Senator Connie Leyva (D-Chino) requires the California Air Resources Board (CARB) to develop and implement a Heavy-Duty Inspection and Maintenance Program for non-gasoline, heavy-duty trucks — the first ‘smog check’ program of its kind in the nation. SB 44 by Senator Nancy Skinner (D-Berkeley) requires CARB to create a comprehensive plan for reducing greenhouse gas emissions from medium and heavy-duty vehicles. Medium and heavy-duty diesel trucks make up only four percent of the 28.2 million vehicles on the road in California but accounted for 20 percent of greenhouse gas emissions from the transportation sector and 8 percent of statewide greenhouse gas emissions this year. Cars, trucks and other vehicles are responsible for more than 80 percent of smog-forming pollution.
“In the face of the White House’s inaction on climate change, California is stepping up and leading the way,” said Governor Newsom. “Our state is proof that you can reach some of the strongest climate goals in the world while also achieving record economic growth. How we meet this moment will define our state – and country – for decades to come, just as the emergence of the internet defined our economy over the past few decades. We have to get ahead of this and align our state investments, our purchasing power and our transportation and housing policies to be ready to meet this moment head-on.”
California is a global leader in climate change mitigation efforts through bold climate goals and actions, as well as leadership in the U.S. Climate Alliance and Under2 Coalition, using the state’s power as the fifth largest economy in the world to drive positive action. California has ambitious and essential climate goals to transition to a healthier, more sustainable and more inclusive economy, including: reducing greenhouse gas emissions 40 percent below 1990 levels by 2030; providing 100 percent of the state’s electricity from clean energy sources by 2045; reducing methane emissions and hydrofluorocarbon gases by 40 percent; and adding 5 million zero-emission vehicles to California’s roads by 2030.
This executive order continues the Governor’s commitment to strengthening California’s resilience while investing in new technologies, programs, and best practices to lower carbon emissions. To mitigate climate threats to our communities and increase carbon sequestration, the Governor invested in forest health and fuel reduction and held utilities accountable for building resiliency. The Governor also directed state agencies to develop a comprehensive strategy to build a climate-resilient water system and made a historic investment to develop the workforce for California’s future carbon-neutral economy.
The executive order will advance California’s climate goals by leveraging:
State Investments: California has an investment portfolio of over $700 billion through CalPERS, CalSTRs, and the University of California Retirement System. As the state transitions to a carbon-neutral economy, and as other states and countries increasingly adopt ambitious climate policy, the state’s investments must align with the reality of this major market shift. The Governor’s executive order directs the Department of Finance to create a Climate Investment Framework to measure and manage climate risk across the state’s investment portfolio, with the goal of driving investment toward carbon-neutral and climate resilient technologies. The Framework will provide a timeline and criteria to shift investments to companies and industry sectors that have greater growth potential based on their focus of adapting to and mitigating the impacts of climate change, including investments in carbon-neutral, carbon-negative and clean energy technologies.
Transportation Systems: The California State Transportation Agency (CalSTA) is directed to invest its annual portfolio of $5 billion toward construction, operations and maintenance to help reverse the trend of increased fuel consumption and reduce greenhouse gas emissions associated with the transportation sector. CalSTA, in consultation with the Department of Finance, is also directed to align transportation spending, programming and mitigation with the state’s climate goals to achieve the objectives of the state’s Climate Change Scoping Plan, where feasible. Specifically the Governor is ordering a focus for transportation investments near housing, and on managing congestion through innovative strategies that encourage alternatives to driving.
State Assets and Operations: California owns and manages major physical assets through the Department of General Services (DGS), including 19 million square feet of buildings and over 51,000 vehicles. We are also a major purchaser of products across our agencies. As a global leader on climate change, and as a responsible asset owner and manager, we must lead by example in our own state operations by aligning our operations with our values. As property owners and managers, we must take the physical impacts from a changing climate into account, as the private sector (bond raters and issuers, reinsurers and insurers) is increasingly doing. With this executive order, the Governor is directing DGS to identify opportunities to lower emissions and mitigate climate risk from the state’s owned and leased assets, primarily buildings and vehicles, and to implement sustainable purchasing policies across state agencies that prioritize the purchase of environmentally preferable goods, consistent with state climate policies.
Vehicles and Electric Vehicle Infrastructure: Moving away from internal combustion engines is critical to reduce carbon emissions and to address major pollution issues across the state, especially in the Central Valley and Inland Empire. Through the executive order, the Governor directs CARB to push automakers to produce even more clean vehicles, and to find ways for more Californians to purchase these vehicles on the new and used markets. CARB is tasked with developing new grant criteria for clean vehicle programs to encourage manufacturers to produce clean, affordable cars and propose new strategies to increase demand in the primary and secondary markets for zero emission vehicles. Finally, CARB shall strengthen existing or adopt new regulations to achieve greenhouse gas reductions within the transportation sector.
Governor Newsom will travel to New York City next week to participate in New York Climate Week events and discuss California’s climate leadership in sustainability, clean energy and fuel standards at the World Economic Forum.
A copy of today’s executive order can be found here.