Policy Brief: California’s Cap-and-Trade Program and Future Direction

Summary

California's Cap-and-Trade Program is a market-based system designed to reduce greenhouse gas emissions across 85% of the state's economy by setting a declining annual cap and allowing companies to trade emission allowances. The primary challenge involves balancing consumer affordability with effective allowance pricing, addressing equity concerns, and reforming compliance mechanisms to ensure deeper emission cuts. Currently, the program is in progress, having successfully generated nearly $30 billion for climate initiatives and proven compatible with economic growth, while facing ongoing discussions for reauthorization and reform to align with 2045 carbon-neutral goals.

Key Facts

Source Document

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