SB 308: Seeking to deepen California’s commitment to carbon dioxide removal

California is the fifth largest economy in the world, and a frequent early adopter of environmental policies that are subsequently embraced by other states and at the national level, including policies focused on combating climate change. The state has two compelling reasons to assume this leadership role again in the context of carbon dioxide removal (CDR). First, California is among only a handful of states that already have ambitious net zero laws on the books. For advanced economies, the numbers reckoned by such laws as a practical matter of implementation inevitably crunch in the direction of CDR. AB 1279 (Muratsuchi), which was enacted in 2022 and requires the state to attain carbon neutrality by 2045, is no exception. 

Indeed, in its 2022 Scoping Plan for Achieving Net Zero the California Air Resource Board (CARB), the main regulator responsible for implementing AB 1279, was unambiguous on this matter: CDR “will be an essential tool to achieve carbon neutrality, and the modeling clearly shows there is no path to carbon neutrality without” it. CARB estimates that the state would need approximately 75 million metric tons of CDR in 2045 to achieve net zero GHG emissions, with an intermediate target of seven million metric tons annually by 2030 “as an ambitious but achievable goal.” It also acknowledges that the state would need to ultimately “enormously” scale up CDR approaches that sequester carbon dioxide from the atmosphere on a time scale commensurate with the residence time of CO2 emissions.

In short, California needs CDR to comply with existing law, and, as just as significant, it already knows it. This level of acceptance and awareness at the state level remains incredibly rare in 2024.

Second, California is unquestionably home to the world’s most dynamic and advanced CDR ecosystem, hosting impressive homegrown clusters of startups, demonstration projects, research institutions, investors and early buyers anchored in both Silicon Valley and Southern California. The state therefore already has a real and quantifiable economic stake in the future of this emerging sector; one that McKinsey and other analysts project could surpass $1 trillion in value by 2050. To a degree shared by few, if any other states (or, for that matter, nations) California’s modern political and economic history has engendered an implicit but deep understanding among policymakers and their constituents that the state’s past, present and future economic prosperity are inextricably linked to innovation. As a result, over many years, Sacramento has attained a kind of muscle memory for enacting policies designed to catalyze and seize early advantage in promising new sectors; and in particular, those that can both materialize economic opportunity, while helping advance the state’s progressive environmental priorities. This legacy, by itself, creates favorable conditions for the emergence of novel, high impact CDR support policies today.

The story of SB 308, legislation introduced by State Senator Josh Becker during the 2023-2024 session, is the clearest early indicator to date that California’s policy-making machinery is beginning to rev up for CDR in a big way. This world-first proposal aimed to establish binding CDR targets on volume and time scales that directly correspond to the requirements already dictated by the state’s net-zero law, and specified explicitly by CARB. 

As law it would have created significant and predictable demand for a variety of CDR pathways starting in 2030, sending a clear signal to investors that CDR is real and here to stay,  while also setting a powerful precedent for other states and nations to follow.

SB 308’s two-year journey through the legislature came to an end last week, when it was held back in the Assembly Appropriations Committee just days before the end of session. However, there is very good reason to view this short term defeat as a measure of undeniable and likely irreversible progress, and a sign that CDR has finally breached an important barrier as an object of serious policy and political consideration. SB 308’s deep run through the legislative process - which included successfully reporting out of the State Senate last year, and the Assembly Natural Resources Committee just last month - signal that the imperative of large-scale CDR to net-zero is now fully installed, even if technical and fiscal debates remain concerning how best to support it.

 With this ground gained, a line of sight to the very real prospect of policy success in 2025 has been established. Regardless of what policy elements are ultimately incorporated into the next iteration of net-zero aligned CDR legislation next year, SB 308 will most certainly have direct and indirect influence as a key frame of reference in this conversation. Therefore, it is useful to unpack in some detail what SB 308 actually proposed. 

A look inside: Unboxing SB 308

The core aim of SB 308 was to create predictable, long-term and escalating demand for CDR, giving shape and certainty to this critical but still nascent climate tech sector. As law SB 308 would have operationalized a form of CDR demand support policy that shares some commonalities with what is known as the “carbon takeback obligation” (CTBO) approach. Like the CTBO, SB 308 embodied the legal principle of “extended producer responsibility,” and would require that carbon dioxide emissions that cannot be practically eliminated within a net-zero timeframe be offset by major emitters through the removal and storage of a commensurate amount of carbon dioxide. This could be effectuated by producers developing their own carbon removal projects, or purchasing this service from other entities. Like the CTBO, SB 308 proposed phasing in this mandate over time, starting with an initial removal requirement of only a few percentage points in 2030, building up to 100% of remaining emissions by 2045.

Further in line with the CTBO, SB 308 centered on market development, and ensuring that CDR supply grows in proportion to need over time through “iterative upscaling”. The bill’s binding and escalating CDR targets would stimulate necessary demand for a range of CDR pathways that need early investment to avoid the “valley of death”. The escalation of CDR deployment overtime would substantially bring down the costs of expensive novel CDR approaches through economies of scale and learning by doing, making CDR a more politically and fiscally viable option in the long term, and as volume targets ramp up and costs decline. 

Section 1 of the legislation establishes that the state will need to deploy CDR approaches to balance out what it projects will be “residual emissions” which the bill’s text estimates will be 15% of aggregate emissions in the state by the middle of the century.  To accomplish this task, Section 2 of the bill provides that the California Air Resources Board (CARB) will use existing programs and regulations, or develop new ones, to ensure that the state “achieves carbon dioxide removals equivalent to at least 100 per cent of statewide  greenhouse gas emissions in … 2045, and all subsequent years …” It also sets an interim target of removing at least 1 percent of projected greenhouse gas emissions in 2030.

However, the bill does not specify how these goals would be accomplished, and most notably, who would be responsible for paying for the requisite carbon removal. By contrast, most carbon takeback obligation proposals mandate that the producers of greenhouse gas emissions are responsible for specified levels of carbon removal, or must pay others to do so. An earlier version of SB 308l specifically prescribed a “polluter pay” mechanism that shifts the payment obligation directly to high emissions facilities already legally defined in statute under the designation of “covered entities.” Polluter pay , however, was cut from the final version to give the regulator a freer hand to incorporate CDR targets into the state’s broade portfolio of net-zero support programs.

The bill also seeks to establish environmental and social safeguards. For example, in cases where carbon removal is effectuated via biomass, it would require that the feedstock be sourced from residues or waste products. This provision appears designed to address concerns that large-scale deployment of biomass-focused CDR approaches, such as bioenergy with carbon capture and storage, could result in the growing of huge amounts of dedicated energy crops, crowding out food production and seriously raising prices for vulnerable populations. The bill also calls for measures to minimize environmental risks to communities adjacent to CDR activities, including from air and water pollution, and monitoring of seismic activity related to geological sequestration of carbon dioxide, and of criteria pollutants and toxic air contaminants. There are also provisions, requiring owners or operators of carbon removal facilities to have conducted “meaningful community engagement,” including at least three public meetings, and to develop a plan for “meaningful benefits” for communities surrounding such facilities. These amendments were incorporated into the last version of the bill, following months of engagement with environmental justice and community groups to ensure that the policy addressed concerns related to risks and adverse impacts. 

Conclusion? Not a chance

Assemblymember Buffy Wicks, chair of the Assembly Appropriations Committee, went on record just hours after the SB 308 failed to report out of hearing, stating that CDR is “going to be a big priority” for assembly leadership next year.  A statement this unequivocal from one of the Assembly’s most influential members is a clear indicator that the campaign for SB 308 has effectively opened the Overton window for CDR in Sacramento. 

Much of the success of SB 308 was the outcome of effective coalition-building and constant, sustained engagement with stakeholders, both supportive and opposed, throughout the process. The coalition, which consists of a diverse cross-section of environmental, labor and CDR industry stakeholders, as well as a robust grassroots network of citizen mobilizers, has no plans to close up shop in the wake of SB 308’s defeat this month. Quite to the contrary, its plan is to not only continue uninterrupted, with an eye to 2025, but to also actively grow and evolve its tactical resources in the remaining months of the year.  

With a taste of near victory still fresh, and a clearer view of a forward political and policy pathway for 2025 materializing, the movement for a game changing CDR demand support law in California not only remains intact; it is stronger, more energized and better poised for impact than ever before.