Over the past decade, California has become a national leader in tackling climate change. This includes passing legislation mandating carbon neutrality and reducing carbon dioxide emissions by 85% by 2045, phasing out internal combustion engine passenger cars by 2035, and increasing the state's resilience to extreme heat and drought. included.
To help California meet its climate goals and make the most effective use of its budget, CPI built a first-of-its-kind climate finance landscape in California, building on its flagship business. . Global climate change finance situation methodology. In doing so, we aim to fill the gap in comprehensive data on both past spending and future investment needs within the state. This analysis helps policymakers and private sector stakeholders identify opportunities, establish priorities, measure progress, and assess the scale of the climate change challenge, including budgets, regulations, leveraging federal funds, and investment plans. help develop a tailored plan to respond to
This landscape is a beta version covering public and private investment by county from 2019 to 2022 across several sectors, including energy and transportation. CPI specifically covers all public and private funding flows across multiple sectors to demonstrate the potential value and use cases of a complete landscape.
Finances need to meet California's demands climate policy goals
To put current spending into context, CPI has developed estimates of the investments needed in various areas to meet California's climate goals by 2045. This needs assessment will help policy makers set appropriate target levels and identify the types of investments that can be made appropriately with scarce public funds. The biggest catalyst for reducing emissions and increasing resilience. To conduct this analysis, we built on CPI's Climate Finance Needs Assessment methodology and incorporated decarbonization models and estimates from state regulators.
CPI estimates that California will need an average of $62 billion annually from 2023 to 2035 to stay on track to meet its climate change goals. Half of these investments will be in zero-emission vehicles, followed by energy systems, agriculture and land use, and buildings and infrastructure. These needs will grow beyond his 2035 year, with average annual needs reaching $79 billion. This is almost entirely due to the increased adoption of zero-emission vehicles.
In this beta, CPI will provide California's largest climate finance fund, including private spending on energy and zero-emission passenger vehicles, federal grants and loans, and state spending through cap-and-trade programs and certain grant programs. Priority was given to the source. Local government bond revenues go toward public transportation and energy efficiency improvements.
CPI tracked $39 billion in climate finance spending in 2022, representing 63% of California's annual needs through 2035.. The annual growth rate in climate finance from 2019 to 2022 was 26%, with most of that growth coming from the private sector. While growth in private sector spending is encouraging and points to a sustainable model, more private sector investment will need to be mobilized to fill the gap in investment needs, especially given relatively scarce state public funding. It is important to do so.
Transportation is by far the largest destination sector for both public and private tracked funding sources.
As shown in the interactive map, climate change funding is distributed relatively evenly per capita by county. However, a higher proportion of climate finance is currently directed to areas with worsening current and historical pollution indicators, as measured by a comparison of per capita climate finance and county-level average CalEnviroScreen scores. No.
Recommendations and next steps
Given our findings on the growth and distribution of climate finance in California, policymakers, civil society, and the private sector can further build on the state's progress by:
- Create a comprehensive roadmap Implement policies that close climate investment gaps across sectors, encourage the transition to net zero, and remove remaining investment barriers.
- Tracking impact Consider emerging policies on climate finance trends and adjust interventions accordingly.
- Identify opportunities where public and concessional funding can have the greatest impact On increasing overall climate finance through pre-development, project preparation and de-risking, particularly for sectors and populations that the private sector currently deems commercially unviable.
Given the relative scarcity of public funds, states should encourage investment from the private sector and the federal government to meet climate financing needs and continue to spend on programs that meet socio-economic policy priorities. It should be prioritized.
This may include funds for:
- bottleneck technology Overall needs are relatively low compared to its benefits, such as electric vehicle charging (US$44 million per year until 2035) and renewable energy transmission (US$1.1 billion per year).
- disadvantaged communities These countries may not have the resources to undertake the energy transition on their own and may be disproportionately affected by current emissions.
Barriers to financial expansion, as factors such as permitting, grid interconnection, coordination between different parties, and the presence of medium-term goals and plans can change the overall cost and risk profile of an investment is not necessarily an increase in funds.
California's climate finance landscape will build on this beta to help improve decision-making and prioritization for state policymakers, development banks, and philanthropic organizations. Other topics that CPI can comprehensively cover include:
- Tracking climate finance: Adds additional sectors and actors, including private investment to decarbonize and build agriculture, climate finance through local budgets, and all state institutions and spending.
- evaluation required: Identify which actors may play a role in each area. Addition of sectors with no clear decarbonization path. Analyze the impact of incorporating equity and economic priorities on climate finance needs.
- capacity building: Identify funds that can be used to match federal funds, build local capacity with technical assistance, and accelerate project development.
- level of analysis: Adds regional and sub-county climate finance tracking and needs assessments, including specific disadvantaged and tribal communities.
