The state of California has been a historical leader on energy and environmental policy, and it is well-positioned to take a leadership role on climate. From August to November 2004, Tellus Institute worked closely with staff members of the California Energy Commission (CEC), the Air Resources Board (ARB), the California Environmental Protection Agency, and other state agencies to review existing forecasts, identify strategies, and compile estimates of potential emissions reductions that are likely to be compatible with strong, long-term economic growth. This report presents the methods, assumptions, and findings of this assessment and served as a basis for Governor Schwarzenegger’s climate target announcement on June 1, 2005.