Assessing the Impacts of Climate Investments in California: 2012 to Today

Historically, California has been ahead of the curve in combating climate change and implementing aggressive climate policies, most notably with the passage of Assembly Bill 32 (AB 32) in 2006 that requires the state to reduce its overall greenhouse gas (GHG) emissions to 1990 levels by 2020 and 40 percent below that by 2030. Now, California is at a transformative moment in terms of climate and clean energy investment. Where we once relied on isolated investments (such as ballot measures and special funds) and the state’s cap-and-trade program to fund these initiatives, there has been increased investment from the state and federal government. These new investments are critical for California because it is the nature of a cap-and-trade program fund like the Greenhouse Gas Reduction Fund (GGRF) to decrease over time as a dwindling amount of allowances are sold to companies.

Following large budget surpluses after the onset of the COVID-19 pandemic, the last two years have seen remarkable investments from the state for these purposes with $21.7 billion in fiscal year (FY) 2021-22 and $23.7 billion in FY 2022-23 for natural resources and environmental protection. More than half of these funds came from the state’s General Fund ($11.9 billion in 2021-22 and nearly $12.8 billion in 2022-23).50,51 Altogether, an estimated $54 billion has been directed toward addressing climate change in California in the last two years.52 Additionally, the federal government passed the Infrastructure Investment and Jobs Act (IIJA) in November 2021 and the Inflation Reduction Act (IRA) in August 2022. The IRA in particular is historic, as it is by far the single biggest climate investment in U.S. history to-date, directing $369 billion toward climate and clean energy over the next 10 years.53 Significantly, the IRA will set up a $23 billion green bank—a program that will buoy clean energy development in California by spurring private investment. Generally speaking, the IRA will add extra momentum to efforts already underway in California.

This chapter will summarize some of the largest state investments in climate and clean energy in California to-date, including recent federal investments, as well as their benefits to the state in terms of emissions reductions, economic growth, and quality-of-life improvements. For federal investments, California-specific data was used to the extent available. After that, the chapter assesses the economic benefits of four programs: the Clean Vehicle Rebate Project (CVRP), the Affordable Housing and Sustainable Communities (AHSC) Program, and two sub-programs within the Electric Program Investment Charge (EPIC) Program. For each of these four programs, the economic output of these investments programs is roughly one to two times the amount invested, signifying that investments in combatting climate change produce economic benefit in addition to reducing emissions.

Recent Federal Climate Investments
  • The Infrastructure Investment and Jobs Act (IIJA) from November 2021 includes $385 million in California to support existing efforts to create a 6,600-mile statewide electric vehicle charging network.

  • The Infrastructure Investment and Jobs Act (IRA), from August 2022, will provide California households up to $28,500 in incentives to buy electric vehicles or appliances, providing up to $1,800 in annual energy costs savings. If the federal funding amount for EV incentives are apportioned equally by population, California would receive $1.5 billion.

California State Climate Investments
  • California’s FY 21-22 budget included $21.7 billion from various fund sources for climate and clean energy, a net increase of $4.8 billion (22%) compared to 2020-21 expenditures. In addition, the FY 2022-23 budget includes $23.7 billion for these purposes.

  • In the FY 2022-23 state budget, the largest climate-related investment in terms of General Fund spending is the combined Energy Package, which includes $6.7 billion for energy reliability and clean energy. In addition, there is $6.1 billion total ($3.56 billion General Fund) over five years for the ZEV package.

  • The EPIC program has funded 437 projects throughout California, and $7.8 billion of private investment has been raised by the private sector after receiving EPIC support as of the end of 2021.

California Greenhouse Gas Reduction Fund (GGRF) Investments
  • Before the last two years, most funding for climate and clean energy came from revenue generated by the cap-and-trade program and deposited into the Greenhouse Gas Reduction Fund (GGRF). While GGRF revenue has been down in recent years compared to historical amounts, it has produced an estimated decline in emissions of 78.6 million metric tons of carbon dioxide equivalent (MMTCO2e) since its inception in 2012.

  • Since the onset of the cap-and-trade program, the GGRF has implemented a cumulative $11.4 billion in climate-related investment through the end of May 2022.

  • The share of funds set aside for low-income communities has increased 18 percent between 2015 and 2021, and the share for disadvantaged communities has increased 32 percent over that same period.

  • Projects funded by the GGRF have resulted in reduced cardiopulmonary disease, and the knock-on effects of lowering cardiopulmonary hospitalization and fatalities have likely led to $7 billion in extra economic value, according to state estimates.

Economic and Environmental Benefits of California Climate Investments
  • The Clean Vehicle Rebate Project (CVRP) has provided over 147,000 rebates to purchase a plug-in hybrid electric vehicle (PHEV), over 324,000 for battery electric vehicles (BEVs), and more than 11,000 for hydrogen fuel cell vehicles (HFCV).

  • California invested $156.7 million in the CVRP in 2021, resulting in 822 total jobs (direct, indirect, and induced jobs) in California, of which 290 were directly created by this project. It also produced $280 million economic output in California’s economy, nearly double the initial investment. Additionally, according to CA Climate Investments, $67.3 million of the funds California invested in CVRP in 2021 benefited priority populations.

  • The CVRP has reduced GHG emissions by an estimated 462,578 metric tons of carbon dioxide-equivalent (MTCO2e) in 2021. This is equivalent to 99,671 gasoline-powered passenger vehicles driven for one year, or 58,268 homes’ energy usage for one year.

  • The Affordable Housing and Sustainable Communities Program (AHSCP) provides loans and grants to invest in sustainable housing, transportation, and other related infrastructure and amenities. In 2021, California invested $357.4 million in AHSCP, of which $326 million benefited priority populations.

  • The AHSCP has resulted in GHG emissions reductions of 514,129 MTCO2e (equivalent to 110,779 gasoline-powered passenger vehicles driven for one year)54 and created a total of 6,543 new jobs in 2021. This program also generated $778 million in total economic output, more than double the investment. VMT reductions from the program are associated with $1.4 billion in travel cost savings, or roughly $1 per miles not driven.

  • EPIC has invested $219 million into the Grid Decarbonization and Decentralization program which is aimed at creating a decarbonized electric grid that is also more decentralized. Overall, the program has produced an economic output of around $325 million, showing how a ratepayer-funded program like EPIC can produce a high-value climate program as well.

  • The EPIC Building Decarbonization project focuses on creating new sustainable technologies for homes and businesses. California’s $232 million investment in the program has generated nearly $369 million in economic value.


50 “The 2021-22 Spending Plan: Natural Resources and Environmental Protection.” California Legislative Analyst’s Office. October 18, 2021. Available at:

51 “The 2022-23 Spending Plan: Natural Resources and Environmental Protection.” California Legislative Analyst’s Office. October 10, 2022. Available at:

52 “Progress Towards Climate 100: The $54 Billion California Climate Commitment.” Climate 100. September 19, 2022. Available at:

53 Lacerda, Leonardo and Darci Vetter. “The U.S. Strengthened its Climate Pledge. Will Other Countries Follow Suit?” The Nature Conservancy. September 6, 2022. Available at:

54 Equivalent estimate provided by the EPA Greenhouse Gas Equivalencies Calculator. Available at: