Special Report: Consumer & Fiscal Impacts of SB 222

Senate Bill 222 (SB 222) is a proposed California law that would allow any individual to file lawsuits seeking damages for climate- related events—including extreme weather, wildfires, and rising sea levels—affecting businesses and other entities that have used, sold, or been associated with fossil fuel products. This unprecedented expansion of liability applies retroactively to the year 1965 for businesses and other entities that have sold fossil fuel products and who made statements based on information available over this time. The resulting costs will ultimately be paid by those including consumers who have used or been associated these products.Businesses that legally operated decades ago could now face massive lawsuits for past emissions.

SB 222 effectively turns climate policy into litigation, with damage awards determined through the courts rather than through established regulatory frameworks. The bill’s strict liability standard means that defendants would not need to be proven negligent— simply having a historical or indirect connection to fossil fuels, and making statements about their products, could be enough to trigger lawsuits and massive financial penalties. This places an extraordinary legal and financial burden on businesses across industries, threatening economic stability in California.

A Cost of Living Driver for All Californians

SB 222 will significantly increase the cost of living in California by raising prices on fuel, electricity, natural gas, housing, and everyday goods. Businesses facing massive litigation costs will pass expenses to consumers, leading to higher energy prices—gasoline could jump 63% to $7.38 per gallon, diesel 69% to $8.23, and electricity rates could rise up to 55% for industrial users. Natural gas prices would spike 76% for residential customers, increasing heating and cooking costs.

Housing costs will also climb sharply, with homeowners paying $1,161 more per year and renters facing an extra $1,692 annually due to rising utility costs. Food, transportation, and consumer goods will become more expensive as businesses struggle with higher fuel and operating costs. Air travel could see dramatic price hikes, potentially making flights to and from California unaffordable.

Overall, households could lose up to $6,200 per year in disposable income, worsening affordability challenges and forcing more residents and businesses to consider leaving the state.

Total Damage Claims:

• Estimated $124 billion to $307 billion annually (2026-2030).
• Up to $1.1 trillion in total claims over five years.
• Retroactive claims from 2000-2022 could total $2.9 to $10.8 trillion.

Consumer Cost Increases in 2026:

• Households could face an annual financial burden of $6,200 due to rising prices.
• Housing costs could increase by $1,161 per year for homeowners and $1,692 for renters.
• Gasoline prices expected to rise 63%, reaching $7.38 per gallon.
• Electricity rates could increase by 31% for residential consumers and 55% for industrial users.

Expands Legal Exposure:

• Broad liability definitions mean businesses in energy, transportation, construction, manufacturing, retail, and other industries could face lawsuits.
• Strict liability standard means companies may be held responsible for damages even if they followed existing regulations.
• Joint liability means a litigant could seek to recover all estimated damages from a single company

Creates a Litigation Industry:

• Punitive damages could be up to four times compensatory damages, leading to annual claims exceeding $384 billion.
• Legal fees for plaintiffs’ attorneys could amount to billions annually, further incentivizing lawsuits.

Threatens Business & Investment in California:

• Businesses may face higher insurance costs, reduced investment, and relocation pressures due to the unpredictable legal landscape.
• Capital-intensive industries may divert investments out of California to avoid potential lawsuits.

Higher Operating Costs:

• Public agencies are exempt from being sued but will face rising costs for fuel, electricity, and construction.

Revenue Declines:

• Job losses and business closures could lead to a reduction in state GDP by $42.6 billion annually and lower tax revenues just from household spending reductions.

SB 222 would impose an unprecedented financial burden on California’s businesses and consumers, driving up costs in nearly every sector of the economy. By allowing open-ended climate litigation affecting companies that have used, sold, or been associated with fossil fuel products—even decades ago

—this bill effectively functions as a massive carbon fee, with costs determined by the courts rather than policymakers. The result would be a sharp increase in the cost of living, putting additional strain on households already struggling with California’s high expenses.

At a time when Californians already pay some of the highest prices for energy, housing, and consumer goods in the nation, SB 222 threatens to make daily life even more expensive, accelerating business departures and population decline. If enacted, this legislation could fundamentally reshape the state’s economic landscape, making it more difficult for families to thrive and businesses to succeed. Instead of fostering economic growth and affordability, SB 222 would burden consumers with rising costs, deter investment, and drive up the price of nearly everything Californians rely on.

This report uses a data-driven approach to assess the potential economic and cost-of-living impacts of SB 222, relying on a combination of regulatory cost models, industry data, and economic forecasting tools. The analysis estimates potential litigation costs using historical case studies of large-scale environmental lawsuits and applies a 1:1 and 4:1 punitive damage ratio to projected claims. Consumer price impacts, including fuel, electricity, natural gas, and housing costs, are based on California Air Resources Board (CARB) emissions data, energy consumption trends, and expected cost pass-throughs from litigation-driven price increases.

Household financial impacts were derived from IMPLAN input-output modeling, incorporating job losses, wage reductions, and GDP contraction. The report also considers historical price trends in regulated markets and real-world energy cost shifts to provide a realistic projection of how SB 222 could impact California’s economy. Given the legal uncertainties surrounding the bill, estimates were presented in a range of scenarios, reflecting best-case to worst- case economic outcomes.

The California Center for Jobs and the Economy is a research and policy organization dedicated to analyzing the economic impacts of legislative and regulatory proposals on businesses, workers, and consumers in California. The Center provides data-driven insights on key economic issues, including employment trends, business competitiveness, energy costs, and the overall cost of living. By leveraging detailed industry and economic data, the Center helps policymakers, business leaders, and the public understand how proposed policies—such as SB 222—could affect jobs, household expenses, and economic growth in the state. Through its reports and analysis, the Center serves as a resource for fact-based discussions on maintaining a strong and sustainable economy in California.