Summary
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Details
- California
The Global Warming Solutions Act (AB 32) is mandatory for regulated sectors across California.
Mandatory Requirements:
Statewide emission reductions to 1990 levels (achieved in 2020).
Ongoing compliance with CARB’s cap-and-trade and regulatory programmes.
Mandatory emissions reporting and verification for large emitters.
Implementation of sectoral mitigation measures and investment in clean-energy infrastructure.
Exceptions and Flexibility:
Offset credits may be used to meet a portion of compliance obligations.
Certain small emitters and agricultural operations have simplified reporting requirements.
Flexibility mechanisms allow regulated entities to trade allowances and offsets.
Deep dive
What’s Required
The Global Warming Solutions Act (AB 32), passed in 2006, established California’s first legally binding framework to reduce greenhouse gas (GHG) emissions to 1990 levels by 2020 and continues to guide the state’s long-term carbon neutrality goal by 2045.
The law authorises the California Air Resources Board (CARB) to design and enforce a comprehensive climate strategy covering all major sectors, including electricity, transport, industry, and agriculture.
Key elements include:
Creation of California’s cap-and-trade programme, the first large-scale carbon market in the U.S.
Mandatory GHG emissions reporting for major emitters.
Development of sector-specific emission reduction standards.
Investment of cap-and-trade revenues into clean energy, infrastructure, and climate justice programmes.
Coordination across agencies to integrate climate goals into energy, transportation, and land-use planning.
Important Deadlines
2006: AB 32 enacted.
2012: Cap-and-trade programme launched.
2020: First emissions target (1990 levels) achieved.
2030: Current goal: 48–50% GHG reduction from 1990 levels.
2045: Target year for statewide carbon neutrality.
Current Status
The AB 32 framework is fully in force and serves as the foundation for California’s ongoing climate policies, including Senate Bill 32 (SB 32, 2016), which expanded the 2030 target, and Executive Order B-55-18, committing to net-zero emissions by 2045.
The California Air Resources Board (CARB) continues to update the Scoping Plan, which outlines the regulatory and market-based measures to meet emission targets. California has already decoupled economic growth from emissions, achieving significant progress through renewable energy expansion, electric vehicle adoption, and clean-fuel standards.
Penalties for Non-Compliance
Companies failing to meet emission reporting or reduction obligations under AB 32 are subject to administrative fines and enforcement actions by CARB.
Penalties may include:
Monetary fines for non-reporting or false data.
Suspension from carbon market participation.
Compliance obligations are carried forward to future periods with additional penalties.
Examples of Known Violations
CARB regularly enforces AB 32 through audits and settlement actions. Past penalties have included multimillion-dollar fines against companies for misreporting emissions or breaching clean-fuel regulations, reinforcing strict compliance oversight.
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