SACRAMENTO, Calif. (AP) — On Saturday, California lawmakers approved a significant climate initiative by passing a bill that will now be sent to Gov. Gavin Newsom. This move, which has been staunchly supported by Newsom, is intended to counteract environmental policy reversals from the Trump administration.
In a show of solidarity, California’s predominantly Democratic Legislature voted to continue the cap-and-trade program beyond its original expiration in 2030. Initiated under Republican Gov. Arnold Schwarzenegger with a 2006 law, the program began in 2013.
This initiative establishes a progressively stricter cap on greenhouse gas emissions from major industries in the state. Companies have several options: cut back on their emissions, purchase allowances from either the state or other businesses, or invest in projects that aim to offset emissions. Revenue from the sale of these allowances funds various climate-related projects, affordable housing, transportation initiatives, and even provides rebates on utility bills for California residents.
Gov. Newsom and other legislative leaders, who had earlier committed to renewing the program, took action just in time before the legislative session ended. They have hailed the initiative as groundbreaking.
“We’ve successfully extended California’s cap-and-trade program,” stated Assembly Speaker Robert Rivas, a Democrat, affirming its role as the foundation of the state’s climate policies, balancing progressive goals with economic feasibility.
The proposed bill aims to prolong the program until 2045, better synchronize emission caps with state climate ambitions, and potentially encourage more carbon-removal projects. Additionally, it suggests renaming the program to “cap and invest,” highlighting its investment in climate efforts.
The Legislature approved another bill committing annual funding from the program’s revenues. It includes $1 billion for the state’s long-delayed high-speed rail project, $800 million for an affordable housing program, $250 million for community air protection programs and $1 billion for the Legislature to decide on annually.
Officials try to balance environmental protection with cost of living
The votes come as officials contend with balancing the state’s ambitious climate goals and the cost of living. California has some of the highest utility and gas prices in the country. Officials face increased pressure to stabilize the cost and supply of fuel amid the planned closures of two oil refineries that make up roughly 18% of the state’s refining capacity, according to energy regulators.
Proponents of the extension say it will give companies certainty over the program’s future. The state lost out on $3.6 billion in revenues over the past year and a half, largely due to uncertainty, according to a report from Clean and Prosperous California, a group of economists and lawyers supporting the program. Some environmentalists say the Trump administration’s attacks on climate programs, including the state’s first-in-the-nation ban on the sale of new gas-powered cars by 2035, added urgency to the reauthorization effort.
But a group of environmental justice groups, including the Center on Race, Poverty and the Environment and the California Environmental Justice Alliance, said the bill lacks strong air quality protections for low-income Californians and communities of color more likely to live near major polluters.
“This year, California’s leaders gutted basic public health and safety protections and took away tools communities need to protect themselves from polluters,” they said in a statement. “The real failure — and the urgent work ahead — lies in reconciling California’s climate rhetoric to the reality of our communities on the ground.”
GOP lawmakers say cap and trade will raise prices in California
GOP lawmakers criticized the program, saying it would make living in California more expensive.
“Cap and trade has become cap and tax,” said James Gallagher, the Assembly Republican minority leader. “It’s going to raise everybody’s costs.”
Cap and trade has increased gas costs by about 26 cents per gallon, according to a February report from the Independent Emissions Market Advisory Committee, a group of experts that analyzes the program. It has played “a very small role” in increasing electricity prices because the state’s grid isn’t very carbon intensive, the report says.
Lawmakers and lobbyists criticized the governor and legislative leaders for rushing the deal through with little public input.
Ben Golombek, executive vice president of the California Chamber of Commerce, said at a hearing this week that the Legislature should have taken more time “to do this right.”
Democratic state Sen. Caroline Menjivar said it shouldn’t be par for the course for lawmakers to jam through bills without the opportunity for amendments.
“We’re expected to vote on it,” she said of Democrats. “If not, you’re seen to not be part of the team or not want to be a team player.”
Menjivar ultimately voted to advance the bill out of committee.
Energy affordability and fuel supply
The cap-and-trade bills are part of a sweeping package lawmakers approved aimed at advancing the state’s energy transition and lowering costs for Californians.
One of the bills would speed up permitting for oil production in Kern County, which proponents have hailed as a necessary response to planned refinery closures and critics have blasted as a threat to air quality.
Another bill would increase requirements for air monitoring in areas overburdened by pollution and codify a bureau within the Justice Department created in 2018 to protect communities from environmental injustices.
The Legislature voted to refill a fund that covers the cost of wildfire damage when utility equipment sparks a blaze. The bill would set up public financing to build electric utility projects.
Lawmakers also passed a measure allowing the state’s grid operator to partner with a regional group to manage power markets in western states. The bill aims to improve grid reliability. It would save ratepayers money because California would sell power to other states when it generates more than it needs and buy cheaper energy from out of state when necessary, the governor’s office said.
