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Legislators, CARB and experts debate cap-and-trade reauthorization, auction revenue drop and use of proceeds to address affordability
Summary
The Joint Legislative Committee on Climate Change Policies opened its 2025 hearings with a full‑day review of California’s cap‑and‑trade program, hearing CARB officials, economists and community advocates debate how reauthorization, allowance levels and use of auction proceeds should protect consumers and frontline communities as the state pursues deeper emissions cuts.
The Joint Legislative Committee on Climate Change Policies held its first 2025 hearing on cap‑and‑trade and affordability, with California Air Resources Board officials explaining the program's design and advocates, utilities and independent experts pressing competing priorities for reauthorization.
California Air Resources Board Chair Lianne Randolph told the committee the board will “defend our clean air and climate protection programs” and argued the state must balance ambition with affordability as it considers changes to the program. Dr. Steven Cliff, CARB's executive officer, said the program currently covers about 80% of the state's greenhouse‑gas emissions and has generated more than $31 billion for the Greenhouse Gas Reduction Fund (GGRF) since its start.
The hearing focused on three linked questions: whether and how the Legislature should extend the cap‑and‑trade program beyond the current 2030 planning horizon, what adjustments to allowances and offset rules would mean for market prices, and how auction proceeds should be used to blunt consumer costs and support frontline communities.
Why it matters
CARB said cap‑and‑trade has been one of the state’s most cost‑effective tools for cutting emissions while producing revenue for climate investments. Randolph noted the program has helped finance efficiency, transit and community projects and that California climate investments have exceeded statutory environmental‑justice targets. But she and other witnesses said recent auction receipts have fallen: CARB reported the most recent auction produced about $850 million, a level the agency described as among the lowest in recent auctions and attributed in part to regulatory and market uncertainty.
What CARB told the committee
Dr. Cliff outlined the program’s core features — a statewide declining cap, quarterly auctions, banking, limited offsets and a mix of free allocations and auctioned allowances. He said auction proceeds have funded more than half a million projects statewide, and that about $13 billion of allowances’ value has been returned to residential ratepayers as the California…
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