California defies Trump again, keeps $28 Billion Cap-and-Trade program critics call a “Tax”

Sacramento, CA — A new clash is emerging between California and the Trump administration over state climate policies, as a recent White House executive order targets California’s long-standing cap-and-trade program.

The executive order, issued earlier this week and titled “Protecting American energy from state overreach,” aims to eliminate what it calls “illegitimate impediments” by states to the development of U.S. energy resources. It specifically criticizes California’s cap-and-trade program, calling it an example of state overreach that drives up energy costs for Americans.

Governor Gavin Newsom dismissed the executive order in a statement, saying, “California’s efforts to cut harmful pollution won’t be derailed by a glorified press release masquerading as an executive order.”

California’s cap-and-trade system, in place since 2012, requires major greenhouse gas emitters—such as power plants, natural gas providers, and large industries—to purchase permits based on the amount of carbon pollution they produce. The program is administered by the California Air Resources Board (CARB), which describes it as “a foundational, cost-effective policy tool” to reduce emissions while funding clean energy and decarbonization projects.

Since its inception, the program has generated $28 billion in climate investments, resulting in over half a million projects across California, supporting an estimated 30,000 jobs and reducing millions of tons of carbon emissions, according to CARB.

The executive order argues that policies like California’s weaken national security and burden families with higher energy prices, even those who don’t live in states with such laws. It also directs U.S. Attorney General Pam Bondi to take swift legal action to halt enforcement of any state laws the administration deems unconstitutional, though no specific legal steps were outlined.

In response, CARB Chair Liane Randolph said the state will not back down. “It should be clear by now that the only thing the Trump administration’s actions accomplish is chaos and uncertainty, but one thing is for certain — California will stand our ground and fight to maintain our authority to reduce harmful pollution to the fullest extent possible.”

California Attorney General Rob Bonta echoed that sentiment, telling Politico the state “remains committed to using the full force of the law and tools of this office to address the climate crisis head-on and protect public health and welfare.”

This is not the first time the Trump administration has challenged California’s climate policies. During Trump’s first term, federal officials tried to block the state’s partnership with Quebec under a cross-border carbon trading agreement. That effort failed when a federal judge dismissed the case in 2020.

Despite criticism—some opponents label it a “cap and tax”—the cap-and-trade program continues to benefit consumers. A portion of the revenue raised goes back to residents as part of the California Climate Credit, which automatically reduces electricity and natural gas bills for customers of investor-owned utilities like San Diego Gas & Electric (SDG&E). This April, SDG&E customers will see an $81.38 credit on their electricity bills and a $54.21 reduction on natural gas bills.