Report warns California could lose $47 Billion without Cap-and-Trade reauthorization

Sacramento, California – As California’s lawmakers weigh the future of the state’s landmark Cap-and-Trade program, new reports released this week warn that delays in reauthorizing the policy are already costing the state billions in lost revenue—while also threatening the economic and environmental benefits the program has long promised.

Governor Gavin Newsom, along with Assembly Speaker Robert Rivas and Senate Pro Tem Mike McGuire, has publicly committed to extending Cap-and-Trade—also known as Cap-and-Invest—through 2045. But so far, no bill has been finalized or passed. That legislative inaction is now raising concerns, not just among environmental groups, but also economists and policy analysts tracking the state’s climate investments.

A study from the Environmental Defense Fund and Greenline Insights projects that a full extension of Cap-and-Trade could generate up to 287,000 jobs and $55 billion in economic growth. The same report estimates that extending the program through 2045 would yield $232 million in net savings for California households and raise a minimum of $47 billion for California Climate Investments—funds that directly support clean transportation, affordable housing, wildfire resilience, and energy efficiency projects statewide.

The urgency to act has been further underscored by a separate analysis from Clean and Prosperous California, which estimates that the state lost up to $3 billion in potential revenue over the past year due to lackluster auction results. That decline is attributed directly to uncertainty around whether the program will be extended. The group projects continued quarterly losses of $600 million to $1 billion until the legislature acts.

The Cap-and-Trade program works by capping overall greenhouse gas emissions and requiring businesses to buy allowances at state-run auctions. The proceeds are then funneled into a wide array of climate-related projects, especially in vulnerable communities. Since its launch, the program has raised $28 billion and has funded projects that cut emissions at a scale equivalent to removing 80% of gas-powered cars from California roads.

Despite the program’s successes, the lack of clarity around its future is creating instability, not just for state revenue forecasts but for businesses and communities that rely on the investments it supports. Clean energy firms, affordable housing developers, and transit agencies are all closely watching the legislature’s next move.

While Newsom and legislative leaders have reiterated their support, the stalled negotiations come at a time when other states—and nations—are ramping up their own investments in climate resilience and green infrastructure. Whether California maintains its leadership in the climate economy may depend on how quickly lawmakers turn promises into policy.