California, September 9, 2025
News Summary
California’s business groups have called for lawmakers to postpone the reauthorization of the cap-and-trade program, emphasizing the need for further discussions on its impacts and necessary reforms. The existing program, set to continue until 2030, is under scrutiny, with Governor Newsom advocating for an extension to 2045. The California Chamber of Commerce has expressed disappointment with legislative inaction, while concerns about economic repercussions and environmental justice remain at the forefront of ongoing debates.
California’s business groups called on lawmakers to delay the reauthorization of the cap-and-trade greenhouse gas emissions reduction program on Monday, urging caution as discussions unfold ahead of the legislative session’s September 12 adjournment. The current cap-and-trade program, initially established in 2006, is set to remain in place until 2030, but Governor Gavin Newsom is advocating for an extension through 2045.
The California Chamber of Commerce expressed disappointment at the legislative inaction and emphasized the necessity of continued discussions beyond the current session. The organization’s president and CEO criticized lawmakers for what she describes as a failure to act decisively in securing a long-term sustainable future for California.
The cap-and-trade program is a critical component of California’s strategy to combat climate change, playing a significant role in ambitious targets aimed at achieving carbon neutrality by 2045. Currently, this program is responsible for roughly two-thirds of the state’s total greenhouse gas emissions and generates significant revenue through auctioned allowances.
Experts have voiced concerns that without a strong cap-and-trade system, California might falter in meeting future reduction targets—aiming for a 40% reduction by 2030 and an ambitious 85% reduction by 2045. Analysis indicates that the state may need to enhance its annual emission reduction rate from the current rate of 2.5% to approximately 8.8% to meet its long-term carbon neutrality goals. Recent trends in revenue generated from cap-and-trade auctions, however, have reflected a decrease over the past year, leading to a loss of about $3 billion and contributing to California’s budget deficit.
Critics of the cap-and-trade program argue that substantial reforms are required in both its structural components and the allocation of its revenue to better address concerns related to environmental justice and the effectiveness of actual emissions reductions. The California Air Resources Board is currently evaluating potential changes to the program. Issues surrounding the distribution of funds have also emerged, with some proposals suggesting that nearly half of the available revenue be allocated to projects such as the high-speed rail system, rather than prioritizing immediate carbon reduction efforts.
Industry officials are expressing fears that the elimination of free emissions credits could lead to the shutdown of refineries and other large-emitting facilities within California. This scenario could result in increased consumer costs due to job losses and operational closures. Recent cap-and-trade auctions have reported a significant number of unsold credits, signaling a decrease in market confidence and introducing uncertainty about the future viability of the program.
The Legislative Analyst’s Office has recommended that lawmakers take more time to assess the ramifications of their policy choices regarding the cap-and-trade program’s renewal, given its far-reaching implications. Concurrently, various environmental groups and advocacy organizations are asserting that any modifications or reauthorizations must incorporate stringent emissions limits and equitable enforcement mechanisms to safeguard vulnerable communities affected by pollution.
As California moves closer to the deadline for legislative action on the cap-and-trade program, the ongoing debates reflect a complex intersection of environmental responsibility, economic impact, and public health concerns, underlining the significance of carefully navigating policies that affect both people and the planet.
FAQ
What is California’s cap-and-trade program?
California’s cap-and-trade program is a regulatory system designed to reduce greenhouse gas emissions by setting a limit on emissions from regulated sources and allowing organizations to trade emissions allowances.
What are the goals of the cap-and-trade program?
The primary goals include achieving a 40% reduction in greenhouse gas emissions by 2030 and attaining carbon neutrality by 2045.
Why are business groups urging lawmakers to delay reauthorization?
Business groups are advocating for more time to discuss reforms needed in the program, highlighting concerns related to its effectiveness and implications for economic stability.
Key Features of California’s Cap-and-Trade Program
| Feature | Description |
|---|---|
| Initial Authorization Year | 2006 |
| Expiration Year | 2030 |
| Target Reduction by 2030 | 40% |
| Target Carbon Neutrality Year | 2045 |
| Current Revenue Loss | $3 billion over the past year |
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Author: STAFF HERE HUNTINGTON BEACH
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