California lawmakers have an opportunity to boldly recommit to our climate agenda by reauthorizing the state’s cap and invest program — a move that would stabilize the carbon market, unlock billions of dollars in climate funding and reaffirm our global leadership.
The cap-and-invest program, authorized by landmark legislation (Assembly Bill 32) in 2006, sets a declining cap on greenhouse gas emissions from the state’s largest polluters. Companies with large amounts of emissions must buy allowances through a carbon market, creating a financial incentive to pollute less and invest in cleaner technologies. The system works: it’s driven emissions reductions, generated revenue and made California a model for climate action.
California must keep this tool in place to stay on track with its climate goals and hold polluters accountable. Ending it now would reward inaction and risk stalling progress.
Every year, the state sells allowances to polluters, generating approximately $4 billion annually into California’s Greenhouse Gas Reduction Fund. These dollars have supported climate-smart investments in every county across the state to reduce greenhouse gas emissions, strengthen the economy and provide meaningful benefits for low-income Californians.
Communities have seen Greenhouse Gas Reduction Fund supporting healthy forests, clean buses, sustainable and affordable housing and job training to support the clean energy transition. The program also returns approximately $3 billion annually to Californians through “Climate Credits” on their utility bills — putting real money back into people’s pockets.
As state senator for the 17th District, I’ve been thrilled to see $547 million in Greenhouse Gas Reduction Fund money used to support over 18,000 projects in California’s Central Coast. These projects have included funding climate adaptation and resilience planning for sea level rise in Morro Bay; converting a homeless shelter in San Luis Obispo to run on solar power; and preserving agricultural land with conservation easements.
These are not abstract climate wins — they’re tangible investments in local communities.
Unfortunately, that progress is now in jeopardy.
In May, the cap and invest auction brought in $500 million less than anticipated due to market uncertainty, driven by the program’s pending expiration. Without reauthorization, we anticipate similar shortfalls in the next auction.
California can’t afford to lose out on billions of dollars of investments toward our clean energy future. A recent study estimates the Greenhouse Gas Reduction Fund revenues generated by extending the cap and trade program through 2045 will support $232 million in net savings for households, 287,000 jobs and $55 billion in economic growth.
The recent deadly fires in Los Angeles and tragic floods in Texas underscore the urgent need to confront climate change. California can send a clear signal to those watching around the country and the world: We remain firmly committed to an ambitious climate agenda and the proven mechanisms we’ve put in place to achieve it.
I urge my fellow lawmakers to support sending cap and invest reauthorization legislation to Gov. Gavin Newsom’s desk.
Sen. John Laird represents the 17th State Senate District, which includes all of Santa Cruz, San Benito and Monterey counties, as well as the majority of San Luis Obispo County. ©2025 The Sacramento Bee. Distributed by Tribune Content Agency.