On April 30, the California Senate Committee on Environmental Quality held a hearing on several important climate-related bills, including one that has the potential to impact the way companies track and disclose their emissions. The hearing, held ahead of a May 2 deadline to move bills through their primary policy committee, also included bills that would support the burgeoning carbon dioxide removal (CDR) industry and set regulations for carbon dioxide (CO₂) pipelines.

New California vendor requirements 

By a party-line vote of five to two, the committee approved SB-755, the California Contractor Climate Transparency Act. The bill requires the state’s largest contractors to annually disclose their greenhouse gas emissions and their climate-related financial risks to the California Air Resources Board (CARB) and the public. California is the fourth-largest economy in the world and state procurements total more than $60 billion a year according to the bill’s lead sponsor. 

SB-755 builds on SB-253 and SB-261, legislation enacted by the state in 2023 that requires certain companies doing business in California to disclose their emissions and climate-related financial risks, depending on their annual revenues. SB-755 will also use the same reporting guidelines as those two bills. The 2023 laws directed CARB to finalize guidance and regulations for complying with SB-253 and SB-261 by January 1, 2025. However, in 2024, the legislature passed SB-219 and the governor signed it into law. That bill amends the timeline for implementing SB-253 and SB-261 by giving CARB six more months to promulgate the necessary regulations.

According to Senator Blakespear (D), the bill’s lead sponsor, an estimated 500 companies meet the lower $5 million threshold, while an estimated 130 companies meet the higher $25 million threshold. There is likely some overlap between these companies and the companies already required to report under SB-253 and SB-261. 

Given California’s enormous economic and political power, these new requirements could serve as a model for other states looking to enhance transparency and drive down emissions. Affected companies likely provide similar services to other states, providing those jurisdictions a jump start with any new disclosure requirements. 

State-level Carbon Dioxide Removal Purchase Program advances

During the April 30 hearing, the committee also approved SB-643 to create a Carbon Dioxide Removal Purchase Program by a vote of seven to zero. The bill directs CARB to establish and administer a program to purchase and retire eligible CDR credits. Specifically, the bill allocates $80 million to purchase credits from four specified CDR pathways. Eligible pathways include direct air capture (DAC), biomass carbon removal and storage (BiCRS), enhanced mineralization or enhanced weathering, and marine CDR. In order to encourage a wide range of CDR pathways, the bill specifies that no more than $40 million may be spent on any one category, and no more than $20 million in credits may be purchased from any one supplier.

SB-643 directs CARB to adopt guidelines that include standards and a definition of eligible CDR projects by June 30, 2026. The bill mentions a “transactional or bidding process,” a “minimum carbon dioxide removal credit purchase contract term length,” and a “maximum carbon dioxide removal credit price per [metric] ton” as details CARB must provide in their guidance. The bill requires these standards to be consistent with, to the extent feasible, certain provisions of the state’s Carbon Capture, Removal, Utilization, and Storage Program.

SB-643 also directs CARB to annually conduct and publish a survey of CDR projects that exist or are in development within California by June 30, 2026. Further, the bill directs CARB, by the end of 2027, to begin publishing an annual report describing the Carbon Dioxide Removal Purchase Program’s completed activities and purchased CDR credits. 

This purchase program builds off an initiative at the federal level under the Biden Administration. The federal Carbon Dioxide Removal Purchase Pilot Prize was designed to identify high-quality CDR credits and encourage greater voluntary demand from the private sector by derisking projects and standardizing offtake agreement structures. The importance of early and strong demand signals for novel fuels and carbon credits, as well as the need to prioritize quality and impact, informed the design of the CDR purchasing program. SB-643 represents the first planned procurement of CDR at the state level. At this time, it remains unclear whether the Trump Administration will continue the federal program, so state-level efforts like SB-643 will be important to support the industry if the federal government steps back. SB-643 also builds off of Canada’s CDR procurement program, part of its Low-carbon Fuel Procurement Program, which commits CAD$10 million by 2030 to purchase CDR services. All three of these programs have the potential to demonstrate how public procurement can incentivize innovation and scale emerging technologies.

CO₂ transport legislation takes next step

The committee also advanced SB-614 which directs the State Fire Marshal to establish regulations for CO₂ transport by a vote of seven to zero. This bill would establish California’s CO₂ pipeline safety regulations and allow the state to lift its pipeline moratorium. The moratorium was instituted under a law enacted in 2022 that put a pause on constructing any CO2 pipelines in the state until the federal Pipeline and Hazardous Materials Safety Administration) finished safety updates to regulations for CO₂ pipelines. In January of this year, the Biden Administration released a proposed version of that rule, but it is unclear if the Trump Administration will finalize it or not. This bill directs the State Fire Marshal to draft temporary regulations, based largely on the Biden ones, that would allow current pipeline projects to move forward. It would then promulgate a full regulation with more detail, including a public input process. The state could fully lift the pipeline moratorium once the final regulations were in place.

Implications beyond California

These three pieces of legislation underscore California’s role as a global policy innovator. These policies set a precedent for other states and nations, particularly as U.S. federal climate action wavers. Subnational leadership can drive sector-wide accountability and technological innovation. 

The California Legislature adjourns on September 12. All three of these bills (SB-755, SB-643, and SB-614) have a long road in front of them. They now advance to the Senate Appropriations Committee for further consideration. Carbon Direct’s policy team will continue to monitor these bills as they advance through the legislature.