Cap-and-Trade helps cities deliver on climate goals. Now it needs their support

By Melissa Sparks-Kranz, legislative advocate

Negotiations over the state’s Cap-and-Trade Program are heating up. The program is set to expire in 2030, and city voices are valuable to securing future funding for climate-safe infrastructure investments at the local level.

“Cap-and-Trade funding is helping us build resilient and sustainable cities that we need for the future of this great state,” said Carolyn Coleman, Cal Cities executive director and CEO, in a recent Capitol Weekly op-ed. “Reauthorizing the program is also critical to accelerating the production of affordable housing and helping local governments meet the state’s housing goals."

Cal Cities and other local government, transportation, and labor partners in late May urged state leaders to prioritize climate-safe infrastructure improvements during negotiations. Last week, lawmakers signaled in their budget deal that their preferred approach for negotiations is through the legislative process — most likely SB 840 (Limón) and AB 1207 (Irwin). Although state leaders will hammer out the details through the end of the legislative session, support from cities now will help ensure those investments are preserved.

How can city leaders help ensure the program helps their communities?

Cities can elevate their voices by submitting a letter of support to their legislative representatives and the lawmakers leading these discussions: Sen. Monique Limón and Asm. Jacqui Irwin. Cities can use a customizable sample letter to share how this much-needed funding could help them reach state housing production and climate goals.

Cities should emphasize the need to invest in proven projects that reduce the greatest amount of greenhouse gas emissions, make Californians safer and more resilient, and support middle-class jobs. Future investments and projects from the program should maximize emission reductions, enhance climate-safe infrastructure, bolster sustainability and resilience, and speed up progress toward climate commitments.

The Cal Cities-led coalition is calling for the Cap-and-Trade Program to invest in the following priorities:

• Local Clean Transportation Infrastructure
• Climate Adaptation Programs, Sea Level Rise, and Organic Waste Infrastructure
• Land Use/Infill Development for Affordable Housing and Sustainable Communities
• State and Regional Clean Transit Infrastructure
• State Wildfire Resilience Infrastructure

How does the Cap-and-Trade Program impact cities?

High-emitting businesses, which represent roughly three-quarters of the state’s emissions, are required by the state to reduce greenhouse gases. However, they can buy a limited number of credits each year — the “cap” — from the California Air Resources Board (CARB) to cover their emissions. The process creates a market price for the credits, with auction proceeds going toward the state’s Greenhouse Gas Reduction Fund.

The fund has generated roughly $30 billion over the last ten years, often distributed to cities and others as grants for transit, rail, transportation, air quality, affordable housing, safe drinking water, and organic waste programs.

For questions, please contact your regional public affairs manager or Cal Cities Environmental Quality Legislative Advocate Melissa Sparks-Kranz. For the full press release from the coalition and more information on the coalition, visit  ClimateSafeInfrastructureCA.com and follow on  Facebook and  X (formerly Twitter).