By Alejandro Lazo

WHAT THE BILLS WOULD DO

Assembly Bill 1207 by Assemblymember Jacqui Irwin, a Democrat from Thousand Oaks, and SB 840 by Sen. Monique Limón, a Democrat from Santa Barbara, respectively reauthorize the state’s landmark cap-and-trade climate program and provide a blueprint for how lawmakers should spend the billions of dollars it generates.

Cap and trade, renamed “cap and invest,” is California’s way of putting a price tag on greenhouse gas emissions — those responsible for climate change. The state sets a strict cap on those emissions and hands out a limited supply of permits. Companies that cut their pollution enough can sell excess permits, creating a market incentive to address climate change.

The reauthorization makes slight changes to how the California Air Resources Board distributes free “allowances” — or pollution permits — to various types of greenhouse gas emitters. But the bill leaves most potential future policy changes up to the air board.

Meanwhile, the funding bill reshapes how some of the money raised from businesses is spent, notably guaranteeing $1 billion a year for California’s troubled high-speed rail project and $1 billion a year for lawmakers to assign through the budget. 

WHO SUPPORTS IT

Gov. Gavin Newsom, Assembly Speaker Robert Rivas and Senate President Pro Tem Mike McGuire negotiated the deal in the final days of the state’s legislative session. The reauthorization was supported by a host of mainstream environmental groups, including the Environmental Defense Fund and the Natural Resources Defense Council, construction trade unions and notable climate activists, including billionaire San Francisco Tom Steyer and former Gov. Jerry Brown.

WHO IS OPPOSED

The California Chamber of Commerce led the opposition, while the oil industry’s main trade group, after initially resisting reauthorization, shifted to a neutral stance. On the other side, environmental justice advocates stayed firmly opposed, arguing the program propped up oil and gas at the expense of vulnerable communities near refineries and other polluting industries.

WHY IT MATTERS

Cap and trade is considered one of California’s most important tools for pricing carbon and generating billions for climate programs. Extending it gives industry certainty and secures funding at a time of budget shortfalls and federal rollbacks under the Trump administration. But it also highlights divisions between climate advocates, industry, and communities living near pollution.

GOVERNOR’S CALL ✅