Tightening cap and trade in California will help climate, group says

By Anne C. Mulkern | 06/04/2024 06:17 AM EDT

Cutting back cap-and-trade allowances would help the state become carbon-neutral by 2045, Resources for the Future analysis shows.

California Gov. Gavin Newsom is aiming to make the state carbon-neutral by 2045.

California Gov. Gavin Newsom aims to make the state carbon neutral by 2045 by changing its notable cap-and-trade program. Rich Pedroncelli/AP

California regulators aiming to hit the state’s ambitious climate goals would have the most success through a policy that would trigger deeper emissions cuts, though it also would raise costs, a new report by an influential energy think tank says.

An analysis by Resources for the Future indicates the most effective way to ensure greenhouse gas emissions cuts through California’s trendsetting cap-and-trade program is to make it more expensive for businesses to avoid those cuts.

The program — the first and largest carbon market in the U.S. — lets facilities exceed annual emissions caps if they pay the state for a permit known as an “allowance.”


If the number of allowances statewide is reduced, some businesses likely would pay more for the permits sold in state auctions, while others would cut site emissions, said Dallas Burtraw, senior fellow at RFF and one of three report authors.