Update as of 9/16/25: State lawmakers have reauthorized Cap and Trade, now referred to as Cap and Invest, through 2045 by passing legislation in the Assembly and Senate, AB 1207 and SB 840. The Climate Center played a lead role in advocating for improvements to the state’s flagship emissions reduction program in the reauthorization process. This new legislation keeps offsets under the cap and requires the California Air Resources Board to re-evaluate the impact of offsets in cutting climate pollution. The legislation also prioritizes nature-based solutions, which reduce and draw down emissions, and also build resilience across California. The climate credit payments to households will be increased, making electric bills more affordable.
More than 1,500 members of The Climate Center community took action to reform and strengthen Cap and Trade through 2045. Thank you for your advocacy!
State lawmakers have begun the long process of reauthorizing and possibly reforming California’s Cap and Trade program this year. Cap and Trade is California’s market-based system intended to reduce greenhouse gas emissions. It works by setting a limit on the total amount of emissions allowed within the state, then allowing companies to buy and sell permits (called “allowances”) to emit a certain amount of pollution. The program is supposed to be one of the most effective tools California has for both reducing climate pollution and generating funds to invest in climate solutions.
But as it’s currently structured, the program gives Big Oil far too much license to continue polluting, especially in frontline communities. Oil and gas corporations receive an estimated $1 billion in giveaways through Cap and Trade every year, literally called “free allowances.” This arrangement threatens public health, increases greenhouse gas emissions, and robs the state of revenue that could go toward climate solutions.
With the 2025 review period now underway, California leaders have a chance to fix Cap and Trade. By reducing the free pollution allowances given to fossil fuel corporations, California can stop the giveaway to Big Oil and clean the air.
Big Oil is already getting special treatment in DC. Lawmakers shouldn’t give them a free ride in California, too. Join us in telling Governor Newsom and state leaders to reform Cap and Trade this year.