California’s Cap and Trade Program Up in the Air

California leaders are debating the future of the state’s cap-and-trade program, which experts say is crucial to the state meeting its climate goals.

As Hayley Smith reports in the Los Angeles Times, “The cap-and-trade program was nation-leading when it was authorized by state law in 2006. It requires major polluters such as power plants, oil refineries and other industrial facilities to purchase allowances, or credits, for each ton of carbon dioxide they emit, and lets those companies buy or sell their unused allowances at quarterly auctions.” The state lowers the number of credits each year, reducing the total allowable pollution in the state.

Governor Newsom is advocating for extending the program, which expires in 2030, to 2045. But critics say the existing cap is too weak. “At the current rate of about 2.5% reductions per year, the state is not on track to meet its 2030 goal, according to an analysis from the nonprofit Next 10, which examines the state’s climate progress each year. What’s more, emissions would need to fall at about 3.5 times that rate — 8.8% per year — to reach the 2045 goal.”

The program also gives away a large number of credits for free as incentives for companies to stay in the state. “Others go to electric utilities and natural gas suppliers to keep them from passing compliance costs onto customers,” Smith adds. “As a result, opponents say, the cap-and-trade program amounts to a get-out-of-jail-free card for polluters, allowing them to continue business as usual without really eliminating harmful emissions in the state — particularly in the low-income and disadvantaged communities that tend to live closest to polluting facilities.”

The governor’s office says it hopes to finalize the program’s extension by mid-September.