If current rates of decline continue through 2020, the state will need to reduce emissions at a rate of 4.97% each year in the decade between 2020 and 2030, and produce even steeper declines in the period from 2030 to 2050, if it is to meet current climate goals.

California has experienced tremendous success implementing policies that incentivize innovation in business, technology and carbon reduction. But the effects of these efforts seem to be reaching a plateau. Therefore, it is critical that the next generation of climate policies be designed to deliver steeper reductions. With uncertainty at the federal level, California must maintain its success and leadership in equitably growing the clean energy economy.

—F. Noel Perry, businessman and founder of Next 10

The California Green Innovation Index has tracked key economic and environmental indicators at the regional, state, national and international level since 2008. This year’s edition finds California’s record is especially impressive when it comes to cutting emissions and energy use per dollar of GDP. The state has become the most energy-productive major economy in the world, moving up three spots from 2013 to 2014, while also reducing its carbon intensity by 4.5%.

California policies have allowed the state to generate more economic growth while producing fewer emissions. In 2014, every $10,000 of economic activity in California resulted in 55% fewer CO₂ emissions than $10,000 of economic activity yielded in the rest of the nation.

—Adam Fowler, economist at Beacon Economics

Transportation. The transportation sector remains the biggest source of greenhouse gas emissions in the state, responsible for 38.5% of emissions and overshadowing all other areas of the economy. In 2015, total transportation-related GHG emissions rose by 2.7%, largely due to an increase of 3.1% in emissions from on-road vehicles. According to the report, it appears that emissions from light-duty vehicles accounted for the entire increase in GHG emissions.

As gasoline prices fell starting in late 2014, motorists logged an additional 2.7 billion vehicle miles traveled (VMT) in 2015, with a concomitant increase in gasoline consumption. While the%age increase in VMT was roughly in pace with population increase, as the cost of driving went down it appears some people abandoned public transportation for driving. Both rail and bus emissions decreased during this time, due in part to the state’s efforts to transition to cleaner fuels and to electrify public transportation.

This increase resulting from a strong economy and lower gas prices is combined with a housing crisis that has led to longer commutes.

Transportation sector emissions vastly outweigh other carbon-producing areas of California’s economy, and the recent spike should alert policy-makers that despite our best efforts, more must be done. Cheap gas prices and a strong economy are creating increased goods movement and prompting Californians to drive more. In addition, the housing affordability and availability crisis is forcing people to live increasingly farther away from work, driving up total vehicle miles traveled in the state by 2.7 billion in 2014, up 0.08% from the previous year. So it’s no surprise that greenhouse gas emissions from vehicles have been increasing, despite California having the nation’s most ambitious clean transportation policies.

—Adam Fowler

Commute times in California increased 2.8% between 2014 and 2015, while at the same time, the state experienced a 4.8% decrease in public transportation trips.

On the other hand, emissions from heavy-duty vehicles dipped slightly. Despite an increase in light-duty truck and SUV sales, these vehicle types only accounted for 1.9 million MTCO₂e of the 4.9 million MTCO₂e increase in GHG emissions; increase in emissions from passenger cars (+2.9 million MTCO₂e) actually outpaced that of light-duty trucks and SUVs. The underlying reasons for why passenger cars’ emissions outpaced those of light-duty trucks and SUVs, despite the former trailing the latter in recent sales growth, are complex, the report suggests. Potential reasons include worsening road conditions and increased congestion.

Other transportation-related findings include:

• As of the end of 2016, about half of all zero-emission vehicles (ZEVs) ever sold in the US were bought in California. In the first quarter of 2017, ZEVs accounted for nearly 5% of the state’s auto sales.

• In 2015, there were 172,895 ZEVs registered in California, up 45.5% from 2014. Over the same time period, traditional gasoline vehicle registration increased 1.7%.

  
  

• The state’s charging infrastructure lags badly. At the time of publication, California has only 0.05 public charging outlets per ZEV, placing it ahead of only New Jersey and Alaska for availability of infrastructure.

Other highlights of this year’s Green Innovation Index include:

• In 2016, energy-related carbon dioxide emissions in the US were 12.5% below their 2006 levels. The decade-long nationwide slide in emissions from power production reflects the electric power sector shifting away from coal and toward less carbon-intensive fuels.

• California’s electric-power sector was responsible for 19.1% of the state’s greenhouse gas emissions in 2015, down 0.9% from 2014.

• In California, per capita electricity consumption decreased 2.3% from 2014 to 2015. In the rest of the U.S., it decreased 1.8%.

• In 2015, California increased renewable electricity to 21.9% of total electricity generation, up 1.8% from the year before. California’s renewable generation increased 8.3% from the year before, with solar jumping 40.3% and small hydro dropping 6.1% due to the drought. Wind generated 37% of the state’s renewable electricity, and for the first time, solar (27%) overtook geothermal (20%) as the second-largest source of renewable generation. The state needs to increase renewable generation by 24% between 2017 to 2020. Effective grid management to incorporate this level of renewables remains a key challenge for the state.

• China remained the largest greenhouse gas emitter in 2014, followed by the U.S. and the European Union. When treated as a country, California moved up two places in comparison to the 49 nations with greatest greenhouse gas emissions, surpassing France and Italy to become the 18^th largest emitter.

• California maintained top rankings as one of the least carbon-intensive emitters (2^nd to France) and one of the highest shares of electricity from renewable energy sources (6^th highest).

Next 10 is an independent, nonpartisan, nonprofit organization that educates, engages and empowers Californians to improve the state’s future. With a focus on the intersection of the economy, the environment, and quality of life, Next 10 employs research from leading experts on complex state issues and creates a portfolio of nonpartisan educational materials to foster a deeper understanding of the critical issues affecting our state.

Beacon Economics is one of California’s leading economic research and consulting firms, specializing in economic and revenue forecasting, economic impact analysis, economic policy analysis, and regional economic analysis.