California lawmakers approve $3.6 Billion climate deal

Sacramento, California – California lawmakers have voted to extend the state’s cap-and-trade program, a cornerstone of its climate policy, through 2045. The move gives Gov. Gavin Newsom a major legislative win on one of his top priorities, even as critics question both the costs and the speed with which the deal was finalized.

The program, first authorized in 2006 under Republican Gov. Arnold Schwarzenegger and launched in 2013, sets a declining ceiling on emissions from major polluters. Companies must cut pollution, purchase allowances, or fund offset projects. Revenues go toward climate initiatives, affordable housing, transportation, and utility credits. Lawmakers also approved annual allocations, including $1 billion for high-speed rail, $800 million for affordable housing, and $250 million for air protection programs.

Newsom pitched the reauthorization as a way to stabilize California’s energy future while accelerating its transition to a clean economy. “After months of hard work with the Legislature, we have agreed to historic reforms that will save money on your electric bills, stabilize gas supply, and slash toxic air pollution — all while fast-tracking California’s transition to a clean, green job-creating economy,” the governor said. The measure also renames the program “cap and invest” to emphasize its funding role.

The timing was critical. The cap-and-trade program was set to expire after 2030, and uncertainty over its future has already cost the state an estimated $3.6 billion in revenues, according to Clean and Prosperous California, a group of economists and lawyers that supports the program. Extending the timeline, proponents say, gives industry clarity and ensures consistent funding for the state’s ambitious climate goals, including carbon neutrality by 2045 and a ban on new gas-powered cars by 2035.

But the program’s costs and compromises continue to spark debate. Gas prices in California, already among the nation’s highest, are roughly 26 cents per gallon higher because of cap and trade, according to an independent report. Republicans derided the extension as an unnecessary burden on families. “Cap and trade has become cap and tax,” said Assembly GOP leader James Gallagher. “It’s going to raise everybody’s costs.”

Some environmental justice advocates also voiced opposition, arguing that the program lets polluters buy their way out of real reductions, leaving vulnerable communities with little relief. “This really continues to allow big oil to reduce their emissions on paper instead of in real life,” said Asha Sharma of the Leadership Counsel for Justice and Accountability.

The vote came in the final days of the legislative session, with critics inside and outside the Capitol faulting leaders for rushing the deal with limited debate. Democratic Sen. Caroline Menjivar acknowledged frustration, saying lawmakers were expected to fall in line or risk being labeled team players unwilling to deliver for the governor. She ultimately voted to advance the bill.

The reauthorization was part of a larger package of climate and energy measures, including expanded pollution monitoring, wildfire fund replenishment, and a controversial bill to speed up oil permitting in Kern County. Collectively, the bills reflect California’s effort to balance its ambitious climate agenda with the immediate realities of cost, supply, and public health.