California has the sixth largest economy on the world, surpassed only by the national economies of the U.S., China, Japan, Germany, and the United Kingdom.[i] And yet, California has firmly established itself as both a national and global leader in greenhouse gas (GHG) emissions reductions.

Today, California has more solar panels installed than all other U.S. states combined, and its per capita GHG emissions are the third lowest in the nation — behind only New York and the District of Columbia.[ii] What’s more, despite the relative size of California’s economy, it accounts for only one percent of the world’s total emissions.

The reason is simple: California has been at the vanguard of the clean energy revolution for decades. And if the steps they have taken in the last year are any indication, they’re just getting warmed up.

California has already succeeded in nearly reducing its emissions to 1990 levels, a stunning achievement that traces back to the passage of the Global Warming Solutions Act in 2006. Last year, the state upped the ante with a new law that calls for an additional 40 percent reduction in emissions by 2030.

It’s an ambitious goal, and one that requires a multi-pronged strategy. To get there, California plans to:

  • generate 50 percent of its electricity from renewable energy (up from 25 percent today) and double building energy efficiency by 2030;
  • reduce the average mileage for passenger cars to 54 mpg by 2025 (up from 36 mpg today);[iii]
  • increase the number of electric cars and other zero-emissions vehicles to 4.2 million by 2030 (up from 250,000 today);[iv]and
  • reduce the amount of climate pollutants other than carbon dioxide (such as black carbon, methane, and hydrofluorocarbons).

But even if California accomplishes all these goals, the state will still fall short of its emissions reduction target. That’s where cap-and-trade comes in.

In 2006, the same law that called for a return to 1990 emissions levels also laid the groundwork for California’s multi-sector cap and trade program – the first of its kind in North America. Essentially, the program gives businesses a choice: cut your emissions or pay to offset your pollution by purchasing a limited amount of permits (with the money from the permits going to finance other climate programs).

Last month, Governor Jerry Brown signed into a law that extends and enhances the cap-and-trade program through 2030, with the hope that it will fulfill over one quarter of the emissions reductions needed to meet the state’s bold new target.[vi]

California is showing the nation – and the world – that it is possible to effectively fight climate change and grow a robust economy at the same time. Indeed, the two go hand in hand. By staking out a position at the leading edge of the clean energy revolution, California is building a future in which both its communities and businesses can flourish.