Last year, Cap and Invest (formerly known as Cap and Trade) was one of the hottest topics in California politics. After intense negotiations, the program was reformed and reauthorized through 2045. But that’s not where this story ends.
Cap and Invest, California’s signature climate program that launched in 2013, is a market-based system designed to reduce greenhouse gas emissions. It works by setting a cap on the total amount of emissions allowed within the state, then companies can buy and sell permits (called “allowances”) to emit a certain amount of pollution. The amount they are allowed to emit declines over time. A good portion of the revenue generated by Cap and Invest goes to the Greenhouse Gas Reduction Fund (GGRF). It’s supposed to be one of the most effective tools California has for both reducing climate pollution and generating funds to invest in climate solutions.
On May 29 of this year, the California Air Resources Board (CARB) approved changes to Cap and Invest that include billions of dollars in giveaways for polluting corporations while cutting funding for the GGRF. The change gives corporations access to a new subsidy, the Manufacturing Decarbonization Incentive (MDI). These new giveaways could result in $2 billion less for the GGRF in a year, which means a lot less to invest in clean transit, affordable housing, clean water, and clean air programs that benefit all Californians.
CARB’s recent decision jeopardizes our climate goals by reducing the effectiveness of the Cap and Invest program and by eliminating funding for critical climate investments.
Last year, The Climate Center was at the forefront of reforming and extending the Cap and Invest program through 2045. We also co-led the coalition that secured nature-based climate solutions as the only new priority for future GGRF investment, and we’re continuing to advocate for reforms that protect crucial climate investments. To learn more about current Cap and Invest negotiations — and how you can take action to prevent rollbacks to climate investments — join us on Thursday, August 13, for our next webinar, Maintaining Climate Integrity in California’s Cap and Invest Program.
This blog first appeared in The Climate Center’s bi-weekly newsletter. To keep up with the latest climate news and ways to take action for a climate-safe future, subscribe today!
