California has a goal to reach carbon neutrality in the transportation sector by 2045. As the vehicle fleet becomes cleaner and greener, the way consumers, firms, and businesses spend money on transportation will shift, driving changes in employment in fossil fuel vehicle and ZEV-related sectors. The paper explains the fundamental relationship between how consumers spend their money and consequent changes in the workforce, characterize Californians’ current transportation-related spending, and forecast changes in these spending patterns that will drive employment changes across transportation-related supply chains between now and 2045. We assess three key categories of expenditures (vehicle purchase, fuel, and maintenance costs) segmented by four general vehicle classifications. We find that if California achieves carbon neutrality in the transportation sector by 2045, California will spend $23.3 billion less across the three key transportation expenditure categories in 2045 compared to 2020, with overall expenditures falling from $175.4 billion to $152.1 billion. All three key expenditure categories will be lower in 2045 than in 2020. By 2045, all new vehicle purchases will be made on ZEVs, and the majority of fuel and maintenance costs will be made on ZEVs. Understanding how expenditures will change can help identify which industries and occupations will be highly impacted by transportation decarbonization. This can inform how private and public agencies manage this transition to ensure it produces equitable, high quality jobs, especially for those workers whose jobs may be eliminated.

The purpose of this report is to provide a research-driven analysis of options that can put California on a pathway to achieve carbon-neutral transportation by 2045. The report comprises thirteen sections. Section 1 provides an overview of the major components of transportation systems and how those components interact. Section 2 discusses the impacts the COVID-19 pandemic has had on transportation. Section 3 discusses California’s current transportation-policy landscape. These three sections were previously published as a synthesis report. Section 4 analyzes the different carbon scenarios, focusing on “business as usual” (BAU) and Low Carbon (LC1). Section 5 provides an overview of key policy mechanisms to utilize in decarbonizing transportation. Section 6 is an analysis of the light-duty vehicle sector, section 7 is the medium- and heavy-duty vehicle sectors, section 8 is reducing and electrifying vehicle miles traveled, and section 9 is an analysis of transportation fuels and their lifecycle. The following sections are an analysis of external costs and benefits: section 10 analyzes the health impacts of decarbonizing transportation, section 11 analyzes equity and environmental justice, and section 12 analyzes workforce and labor impacts. Finally, future research needs are provided in section 13. The study overall finds that cost-effective pathways to carbon-neutral transportation in California exist, but that they will require significant acceleration in a wide variety of policies.