A diverse group of over 40 business entities — including IKEA U.S, Sierra Nevada Brewing Company, and REI Co-op — as well as several business associations and nonprofit organizations collectively representing nearly 1,000 companies — including Advanced Energy United, CALSTART, Ceres, IETA, and the RNG Coalition — is urging the California legislature to strengthen the state’s Cap-and-Trade Program by extending the program through 2045 by the end of the legislative session on September 12.
The Cap-and-Trade Program is set to expire in 2030, and legislative uncertainty about its future is already taking a toll. Falling allowance prices are depriving California of revenues that would have otherwise helped lower utility bills and been directly invested in communities. A recent report by Clean and Prosperous California estimates that California has left up to nearly $3 billion in auction revenues on the table over the last year due to uncertainty around the Cap-and-Trade Program.
With the next auction taking place today, the program will continue to underperform unless there is swift action from the legislature. “If the Program is not extended this year, then investors will lose faith that leaders are serious about using Cap-and-Trade to hit California’s ambitious climate targets, meaning auctions will dramatically underperform and investors will move their funds away from climate-friendly projects,” said Lenny Hochschild, Founding Partner of Environmental Commodity Partners LP. “This outcome would have a chilling effect on climate investments across the global financial community.”
In contrast, a strengthened Cap-and-Trade Program will further drive clean investments into California and uphold the state as a global economic powerhouse. California’s clean energy leadership has been a major economic driver, helping the state achieve the world’s fourth-largest economy, and, among the largest economies in the world, it has the second-fastest growth.Â
“Reauthorizing California’s cap-and-trade program isn’t just good climate policy, it’s smart economic strategy,” said Edson Perez, California Lead at Advanced Energy United. “Certainty in this program will significantly increase private investment into California’s economy, create good-paying jobs, and keep our state competitive. It’s also a proven way to keep energy affordable by funding programs that lower utility bills for families and businesses.”
“Businesses know that policy certainty fuels a strong economy, healthy communities, and a safe climate,” said Kelly Trombley, director, state policy, at Ceres. “There is a long track record of companies standing up for cap-and-trade as a cost-effective, market-based climate solution. For nearly a decade, businesses have championed carbon markets across the Pacific West. They continue this support today—urging lawmakers to keep California leading on cap-and-trade to cut emissions and strengthen our economy.”
American economists created Cap-and-Trade as a cost-conscious emissions reduction strategy. “Carbon pricing marshals the entire economy in a coordinated search for efficient and effective emissions reductions, and this is one of the reasons it has long enjoyed bipartisan support,” said Clayton Munnings, Executive Director of Clean and Prosperous California. “It’s important to listen carefully to the perspective of companies that comply with and work under climate policies, and this letter demonstrates clear and strong support for California’s Cap-and-Trade Program.”
Editor’s Note:
Ceres and Clean & Prosperous California will host a webinar on the business support letter on Monday, August 25, at 12:00 pm PT. Please register in advance here.
About Ceres
Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and resilient economy. With data-driven research and expert analysis, we inspire investors and companies to act on the world's sustainability challenges and advocate for market and policy solutions. Together, our efforts transform industries, unlock new business opportunities, and foster innovation and job growth – proving that sustainability is the bottom line.Â
About Clean and Prosperous California
We are a team of economists and lawyers based in California and committed to securing a clean and prosperous California for all. We examine carbon pricing through an economic lens by synthesizing scientific evidence from the literature and using economic thinking to produce new research. Economic thinking facilitates smart designs for California’s cap-and-trade program so that climate action can be leveraged to solve a variety of statewide problems such as the affordability crisis, devastating wildfires, and budget deficits.