California has set goals that all new homes will be zero net energy (ZNE) by 2020 and new businesses will be ZNE by 2030. These goals drive California energy policy and building industry responses and influence regional and national initiatives. This presentation summarizes California's ZNE codes, standards and policies and their impact on the private sector and consumers and highlights challenges when trying to provide cost-effective ZNE homes. Examples of high performance buildings, design challenges, advanced available technology and ongoing efforts to provide breakthrough design options in response to the California ZNE goals are highlighted.