Analysis finds landmark law helped cut emissions, grow the economy and deliver billions in economic benefits, while identifying affordability as critical to sustaining future progress

SACRAMENTO, Calif., Sept. 25, 2026 /PRNewswire/ -- Twenty years after California adopted its landmark climate law, a new report from Next 10 examines how Assembly Bill 32 transformed the state's economy and energy system, accelerated investment in clean technology and established California as a global leader in climate action.

The report, Twenty Years of AB 32: California's Landmark Climate Law and Its Legacy, finds that California reduced statewide greenhouse gas emissions by 23.3% between 2006 and 2023 while continuing to grow its economy. During that period, gross domestic product per capita increased by 41%, while greenhouse gas emissions per capita fell by 29%.

"California's experience over the last 20 years demonstrates that reducing emissions and growing the economy are not mutually exclusive," said F. Noel Perry, founder of Next 10. "AB 32 helped create an entirely new framework for climate action—one that has driven innovation, attracted investment, created jobs, and delivered measurable benefits to communities throughout the state."

Signed into law in 2006 by Governor Arnold Schwarzenegger, AB 32 established the nation's first economy-wide cap on greenhouse gas emissions and laid the foundation for California's cap-and-trade program, now known as Cap-and-Invest. Revenue generated by the program has supported investments in affordable housing, clean transportation, energy efficiency, air quality, safe drinking water, and climate resilience. These programs have also put money back into Californians' pocketbooks through utility-bill credits, rebates and incentives that help lower household energy and transportation costs.

"The story of AB 32 is the type of policy story the world needs right now. It's a story of what is possible when leaders have the courage to think big, work together across partisan divides, and terminate pollution," said former Governor Arnold Schwarzenegger. "California didn't wait for anybody else. We did what was right, by working as a team, in an election year, to show the world that the idea that we had to choose between protecting the environment and growing the economy was a false choice."

Over the next two decades, AB 32 provided the foundation for continued climate action across three gubernatorial administrations, working with the Legislature, the California Air Resources Board, the California Energy Commission, and other state agencies to deliver environmental, economic and public health benefits across California.

Among the report's key findings:

Economic Benefits

• California's Gross Domestic Product (GDP) per capita grew by 41% between 2006 and 2023.
• California led the nation with 552,300 clean-energy jobs in 2024, nearly twice as many as the second-ranked state, Texas.
• Of the $15.5 billion implemented through California Climate Investments between 2014 and 2025, 76% benefited disadvantaged and low-income communities and households.
• More than $16 billion has been returned to residents and small businesses through twice-yearly California Climate Credits on electricity and natural-gas bills.
• California Climate Investments have reduced energy and fuel-use costs by an estimated $38.1 billion, including $5.2 billion in 2024.
• Climate-funded projects are expected to generate $44 billion in savings from reduced energy and transportation expenses, including fuel and parking costs, over the project lifetimes.
• Since the 1970s, California's energy-efficiency standards have saved consumers more than $200 billion, while the 2025 California Energy Code is projected to save an additional $4.8 billion over 30 years.
• The Affordable Housing and Sustainable Communities Program has helped build 20,361 affordable homes, with residents saving an average of $10,566 per household annually in rent.

Environmental Benefits

• Statewide greenhouse gas emissions fell by 23.3% between 2006 and 2023, while emissions per capita fell by 29%.
• California met its initial goal of reducing emissions to 1990 levels four years ahead of schedule.
• Transportation-sector emissions fell by 26.7% between 2006 and 2023, including reductions of 19.7% from passenger vehicles and 45.3% from heavy-duty vehicles.
• Emissions from electricity generation fell by 45.2% between 2006 and 2023, including a 70.9% reduction from imported electricity and a 17.4% reduction from in-state generation.
• Utility-scale and rooftop solar supplied 51% of California's electricity in May 2026, making California the first major economy in the world to generate more than half of its electricity from solar for a full month.
• California installed more than 21,000 megawatts of battery storage by mid-2026, a 2,500% increase since 2019 and 41% of the way toward the state's 2045 target.

"AB 32 sent a clear signal that California was serious about building a clean-energy economy," said Matt Petersen, president and CEO of the Los Angeles Cleantech Incubator. "We have seen that leadership help entrepreneurs turn new ideas into companies, attract private investment and build a thriving innovation economy that creates jobs and opportunity."

The report calls for continued investment and policy innovation to meet growing electricity demand, modernize aging infrastructure and reduce emissions without placing new costs on consumers. It identifies energy efficiency, more cost-effective wildfire mitigation, clean-energy development, grid modernization, and targeted incentives as important tools that support affordability while keeping California on course toward its climate goals.

"The next chapter of California climate policy must be judged not only by how effectively it reduces emissions, but also by whether it makes the transition more affordable and accessible," Perry said. "That means lowering household costs, protecting ratepayers and ensuring that low- and middle-income Californians can participate fully in—and benefit from—the state's clean-energy future."

The full report is available here.

About Next 10

Next 10 is an independent, nonpartisan organization that educates, engages and empowers Californians to improve the state's future. Next 10 commissions research from leading experts on complex state issues and communicates the findings to help inform California's most important policy debates.

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SOURCE Next 10