Energy.

Garcia, together with coauthor Zbur, anchors a sweeping recalibration of California’s climate financing framework by expanding and renaming the state’s climate catalyst lending tools to address industrial decarbonization, with a new emphasis on health-harming pollutants and a strengthened governance cadence. The bill ties substantial program authority to legislative appropriations, imposes a sunset on new incentives after 2031, and embeds a requirement for ongoing public posting and agency consultation as the financing plans evolve.

The core change is a restructured set of financing programs under the California Infrastructure and Economic Development Bank that categorizes climate catalyst projects into distinct accounts and advisory pathways. A Climate Catalyst Revolving Fund is expanded to support various categories, including a newly defined Industrial Decarbonization agenda, with separate accounts for each category (such as a dedicated Clean Energy Transmission Financing Account). The financing plan for each category is adopted by the bank board, posted on the bank’s website, and remains in effect only after board approval. The bill also requires annual consultations with designated state agencies and a formal revision cycle for financing plans, with revisions taking effect only after specific notice to the Joint Legislative Budget Committee.

Among the most notable programmatic shifts is the creation of an Industrial Facilities Thermal Energy Storage Program within the Long-Duration Energy Storage Program, designed to decarbonize industrial heat and power use. Definitions are updated to include thermal energy storage and to delineate eligible facilities and projects—excluding pumped storage and lithium-ion storage—and establishing criteria that projects must meet to qualify for financial incentives. The bill adds a set of incentive preferences that prioritize grid reliability, peak-shaving, and increased use of renewable energy, while also requiring a plan for pollution remediation for facilities with prior air permit violations and ensuring community benefits considerations are incorporated into project decisions.

Labor standards, community protections, and oversight mechanics are woven throughout. For post-2027 applications, construction work funded by incentives must proceed under a project labor agreement meeting defined wage, apprenticeship, and targeted hiring obligations, with additional MCC preapprenticeship requirements. Incentives are capped at 20 percent of funds allocated to a single project, and preferences extend to under-resourced communities and benefit agreements with surrounding communities. The program envisions coordination with the State Air Resources Board to align incentives with greenhouse gas reduction targets and includes an allowance-surrender mechanism tied to reductions achieved. Eligibility and project requirements also incorporate interconnection timing, environmental justice considerations, and commitments to exceed certain best-available-control-technology standards where applicable, with interconnection deadlines emphasized for certain incentive categories.

Contextual and implementation considerations accompany these provisions. The bill’s reliance on annual appropriations, public posting, and ongoing agency consultation creates a governance framework that favors transparency but may slow decision-making. A 2031 expiration on incentive approvals introduces a finite window for project financing, informing long-range planning for decarbonization investments. The exclusion of certain storage technologies, definitional clarifications for “under-resourced communities,” and the specifics of community benefit structures will require implementing regulations and guidance to ensure consistent application. Overall, the measure expands California’s industrial decarbonization toolkit while embedding labor, environmental justice, and fiscal controls into the incentive design.