California lawmakers face multiple legislative deadlines with three weeks remaining, including housing, power-grid integration, AI regulation, and renewal of the cap-and-trade program. The state Air Resources Board auctions emission permits each quarter, generating over $30 billion to date, and the program is scheduled to end in 2030. Governor Gavin Newsom seeks a 15-year renewal with modifications and a rebrand to cap and invest to stabilize carbon pricing and spur clean technology investment. Business and gas-emitting industries favor renewal for predictability, while environmental groups prefer direct company-by-company limits. Key contested details include falling auction proceeds, allocation of free permits, and how auction revenues are spent.
The issue's macro-politics are that while gas-emitting industries and business groups favor its renewal as a predictable way of meeting emission reduction goals, environmental groups see it as business buying exemptions from pollution. They would prefer direct company-by-company regulation. Within that conflict are other issues, such as steadily dropping proceeds from the emission auctions, which emitters with vital products should be given permits without cost, and how auction revenues should be spent.
Newsom wants the program to be renamed cap and invest. In the state budget he signed in June, it declared the establishment of a stable and predictable price on carbon pollution to drive deeper investments in carbon reduction and clean technologies. However, the more than $30 billion generated by the auctions to date are not always being spent on effective emission reduction programs.
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