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California’s Leadership in Climate Legislations in Advancing Building Decarbonization

Over the past year, California has spearheaded critical environmental legislation focused on building decarbonization and climate action, further cementing its position as a sustainability leader. This article highlights the recent policies and their implications for Commercial and Industrial (C&I) buildings and the clean energy supply, particularly solar.

Climate Corporate Data Accountability Act, Senate Bill 253, requires businesses with annual revenues surpassing $1 billion to publicly disclose their greenhouse gas (GHG) emissions yearly, affecting an estimated 5,300 companies currently operating in California. The bill emphasizes that the reporting must be easy to understand and accessible to Californian residents.

Scope 1 emissions are directly linked to a company's activities, whereas Scope 2 emissions are produced indirectly, such as from purchased electricity. Scope 3 includes all indirect emissions from a company's supply chain. Reporting for Scope 1 and 2 emissions commences in 2026, followed by Scope 3 in 2027. The law stipulates that these disclosures must adhere to the GHG Protocol standards and undergo third-party verification, with noncompliance penalties reaching up to $500,000.

SB 261, or the Climate-Related Financial Risk Act, mandates that California businesses with annual revenues exceeding $500 million must publicly disclose their climate-related financial risks and risk management strategies every two years, starting January 1, 2026. This measure is anticipated to impact over 10,000 entities in the state, which will be subject to an annual fee to cover administrative and implementation costs.

Building Energy Savings Act or SB 48 aims to establish building performance standards for commercial buildings exceeding 50,000 square feet, which disproportionately consume energy despite representing a small fraction of California’s building stock. “The Building Energy Savings Act will help save California’s climate by saving energy and saving money,” commented Steven King, Environment California’s clean energy advocate. “Gov. Newsom has taken an important step to upgrade the state’s big buildings for a greener, more resilient future.”

This legislation lays the groundwork for future laws that will set performance standards for these large buildings, with a strong emphasis on slashing GHG emissions and improving energy efficiency. The Building Energy Savings Act aligns seamlessly with the Golden State’s broader objectives of reducing its carbon footprint and cultivating a sustainable built environment.

State Agency Building and Renovation Projects and LEED Certification SB 416 requires LEED (Leadership in Energy and Environmental Design) Gold certification, the world’s most widely used green building rating system, for all new building projects and major renovations exceeding 10,000 gross square feet conducted by California state agencies. LEED certification provides a framework and rigorous standards for healthy, ultra-efficient, and cost-saving green buildings, yielding benefits for Environmental, Social, and Governance (ESG). It requires LEED Gold certification for new or significantly renovated state buildings and build-to-suit leases exceeding 10,000 square feet, reinforcing California’s commitment to sustainability in state-funded construction and renovation projects.

CALGreen is the nation’s first mandatory green buildings standards code, implemented in 2007. The CBSC (California Building Standards Code) introduced this program to cost-effectively reduce GHG emissions to 1990 levels by 2020 in efforts to meet the goals of the landmark long-term initiative AB 32, the California Global Warming Solutions Act of 2006. In 2023, CALGreen mandated large non-residential and school buildings to reduce embodied carbon emissions, effective July 1, 2024, and required 40% of parking spaces to provide level two EV charging stations for new multifamily buildings.

Future-proofing C&I Businesses with Energy-as-a-Service Solar
California continues to set ambitious standards for a more sustainable and environmentally conscious future, serving as a model for other states and regions worldwide. C&I companies doing business in California can stay ahead of the legislation by adopting solar power through the innovative Energy-as-a-Service (EaaS) business model. Without any upfront capital or risk, GreenStruxure will take care of everything – from the financing, design, installation, and ongoing maintenance – for an onsite solar PV microgrid. Reach out to our team of energy experts to learn how EaaS solar can affordably accelerate your net-zero goals while ensuring compliance with upcoming regulations and GHG emissions disclosure.