A Conversation with California Governor Gavin Newsom | Global Investors' Symposium São Paulo 2025

Federal-State Power Dynamics

• The relationship between the federal government and California is currently under unprecedented challenge, described by the speaker as a period where federal actions are "putting America in reverse" and "vandalizing California's leadership" in climate policy.
• The speaker cites the 10th Amendment as the constitutional basis for states' rights, emphasizing California's role as a reliable, long-term partner in contrast to the current U.S. administration.
• California is framed as a "vacuum-filling" entity in the absence of federal leadership, having maintained a bipartisan legacy of low-carbon leadership since Ronald Reagan established the California Air Resources Board in 1967.

California's Economic and Climate Performance

• California's economy is valued at $4.1 trillion annually, ranking as the fourth largest globally, a rise from the sixth largest position six years ago.
• The state achieved 67% clean energy usage in 2023 and recorded nine out of ten days in 2025 (at the time of the speech) with 100% clean energy for part of the day.
• California now hosts the #1 Fortune 500 companies in the U.S., up from third place six years ago, driven by dominance in green technology and innovation investment.
• The state has no unmet goals; every climate target set by California has been achieved ahead of schedule.

State-Level Policy Levers and Regulatory Tools

• Cap and Invest: The program was recently extended statutorily to 2045, providing a level of carbon market certainty unmatched globally.
• Low Carbon Fuel Standards: Framework commitments have been extended for decades to ensure investment stability in the fuel sector.
• Permitting Reforms: Significant improvements were made to procurement and permitting strategies, including a new opt-in certification program that approved a 2,300-megawatt battery storage project in the Central Valley.
• Nuclear Energy: The speaker extended the life of California's last remaining nuclear plant (9% of base load) despite initial plans to retire it, citing a shift in public and political acceptance of nuclear power as a low-carbon strategy.

Energy Transition Metrics and Challenges

• Battery storage capacity has surged from 770 megawatts six years ago to over 17,000 megawatts currently, making California the only jurisdiction outside China with comparable implemented storage.
• Investment in the energy transition surpassed $2 trillion globally in 2024, though Bloomberg estimates a $3.5 trillion funding gap remains by 2030.
• AI development is constrained by energy capacity; the speaker notes NVIDIA data centers in Santa Clara sat idle due to local utility capacity limits, prompting a focus on grid expansion and reliability.

Economic Risks and Market Realities

• Climate change is explicitly framed as a financial risk; insurance availability is collapsing in high-risk areas like Florida and California, threatening home values and mortgage financing.
• The state produces 29% of new vehicle sales as hybrids or EVs in Q3 2025, up from 4% when the speaker took office.
• Green-collar jobs now outnumber fossil fuel jobs in California by a ratio of 7:1, despite the state being a major fossil fuel producer.
• The speaker contrasts California's "free enterprise" model with what he terms "crony capitalism" and "state capitalism" perceived at the federal level.

Sub-national Coalitions and Global Alignment

• California co-chairs the U.S. Climate Alliance with 24 other governors, collectively representing 60% of U.S. GDP and 55% of the population, to uphold Paris Accord principles independent of federal policy.
• The state partners with "All In America" and the Bloomberg Philanthropies to advance specific tenets of the Paris Accords.
• The speaker identifies "captured interests" (lobbyists, oil executives) as the primary barrier to progress at the federal level, describing the federal environment as an "ideological war."

Social and Political Context

• The speaker warns of an "existential moment" for the U.S., citing a simultaneous crisis of climate and democracy, including the Jan 6 pardons and concerns over the erosion of the rule of law.
• He notes that 70 individuals were pardoned by the U.S. President for attempts to disrupt the democratic process on Jan 6, 2020.
• The speech highlights a generational shift, noting this is the first generation in U.S. history where a 30-year-old earns less than their parents, fueling a demand for economic restructuring.
• A massive wealth transfer of $70–$80 trillion is anticipated over the next generation, with women projected to control a significant portion of this capital.

Future Outlook and Strategic Advice

• The speaker urges a shift from "goal setting" to "implementation," arguing that the U.S. risks losing technological competitiveness to China if it fails to secure supply chains and manufacturing dominance.
• He advises investors and leaders to focus on regulatory certainty and permitting reforms as the primary mechanisms to unlock capital and de-risk green investments.
• The speaker identifies California as a "stable, reliable partner" 1,600 miles from Washington, encouraging international and domestic investors to base decisions on California's long-term stability.
• He expresses optimism regarding the next generation's values but warns that without a shift to "sustainable values" over "short-termism," the U.S. republic faces risks of polarization and decline.