Report: Cap-and-Trade Proceeds Are ‘Clearing the Air’ in California

A report released on March 14 by the California Air Resources Board (CARB) and the California Department of Finance details how investments from California’s cap-and-trade auction proceeds are delivering on their promise to reduce greenhouse gas emissions (GHGs) and boost the use of clean technologies throughout the Golden State.

The “2017 Annual Report to the Legislature on California Climate Investments Using Cap-and-Trade Auction Proceeds “ tracks the progress of California Climate Investments – which awarded and implemented more than $500 million in new funding last year and more than doubled the number of projects statewide, spread over 57 of California’s 58 counties.

The Cap-and-Trade program, established after the passage of California Assembly Bill 32 in September 2006, seeks to reduce greenhouse gases from multiple sources. It sets a firm limit or cap on GHGs and creates incentives to reduce emissions below allowable levels through investments in clean technologies. With a carbon market, a price on carbon is established for GHGs. Market forces spurt technological innovation and investments in clean energy.

To date, $3.4 billion has been appropriated by the California Legislature to 12 state agencies, which have distributed $1.2 billion to projects that have been completed or are under way. Funding has benefited a wide variety of recipients – among them:

  • The Port of Los Angeles, which is launching the world’s first shipping terminal to generate all of its energy needs from renewable resources, improving the air quality and local economy of nearby Wilmington, one of the state’s most disadvantaged communities
  • Southern California’s Metrolink commuter rail line, which is purchasing ultra-clean locomotives that will expand service and reduce commute times on its Antelope Valley and Ventura County lines while improving air quality in adjacent communities.
  • Transformative Climate Communities, a program to invest $140 million in three municipalities, in order to ensure that low-income populations are directly included in the state’s cutting-edge initiatives to reduce global warming.

In addition, nearly 30,000 projects are underway to install energy efficiency measures; and 105,000 rebates have been issued to buyers of zero-emission and plug-in electric vehicles.

“The investment of cap-and-trade proceeds is reaching every corner of the State, cutting greenhouse gases and improving air quality – and quality of life – for millions of Californians, especially in the state’s hardest hit communities,” said CARB Chair Mary D. Nichols.

However, some are not so happy. According to a report in the Los Angeles Times on March 15, Governor Jerry Brown (D) wants to extend the program, but the Legislative Analyst’s Office says that it could lead to higher gas prices at the pump. Right now, the office points out, the price of permits sold in state-run auctions is less than $14. However, if the program is extended and pushes ahead with tougher climate goals, the price of allowance could to $50 over several years. If this happens, “drivers could see the price-per-gallon of gasoline increase by 45 cents,” Ross Brown from the nonpartisan Analyst’s Office warned.


Projects funded to date are expected to reduce greenhouse gas emissions by more than 15 million metric tons of carbon dioxide equivalent (CO2e). In addition, the High Speed Rail Project is estimated to reduce GHG emissions by almost 59 million metric tons of CO2e over its operating life. The 2017 annual report includes detailed information on cost-effectiveness and metrics for evaluating program effectiveness.

Accompanying this year’s report is an interactive map that allows users to track where cap-and-trade funds are being invested anywhere in the state. Users can view the locations of individual projects and aggregate them by program and by the state’s 120 legislative districts and 58 counties.

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