California Business Groups Urge Delay on Cap-and-Trade Renewal

California, September 9, 2025

News Summary

California business organizations are requesting lawmakers to delay the renewal of the cap-and-trade greenhouse gas emissions program, citing the need for more discussions and necessary reforms. Governor Gavin Newsom supports extending the program to 2045, critical for meeting the state’s ambitious climate goals. However, experts warn that without a strong cap-and-trade framework, California may struggle to achieve its future emissions reduction targets.

California business groups are calling on lawmakers to postpone the reauthorization of the cap-and-trade greenhouse gas emissions reduction program ahead of the upcoming legislative deadline on September 12. The cap-and-trade program, initially authorized in 2006, is currently set to promote California’s ambitious climate goal of achieving carbon neutrality by 2045, without expiring until 2030.

The California Chamber of Commerce has expressed disappointment regarding the ongoing legislative inaction. It has emphasized the necessity for extended discussions about the program beyond this year’s session. The organization’s president and CEO criticized lawmakers for failing to secure a sustainable future, highlighting the urgency of the matter.

Governor Gavin Newsom supports the extension of the cap-and-trade program until 2045 and is aiming to secure its renewal before the legislative session closes. The program currently accounts for around two-thirds of the state’s greenhouse gas emissions and generates billions of dollars annually through allowances sold at auctions.

Experts warn that California may not successfully meet its future greenhouse gas reduction targets without a strong cap-and-trade program. The state has set a goal to reduce emissions by 40% by 2030 and achieve at least an 85% reduction by 2045. Without significant reforms, experts assert that these targets could be unattainable.

Concerns and Recommendations

Critics have pointed out that there is a pressing need for significant reforms in the cap-and-trade structure and the allocation of revenue generated from the program. Many advocate that these reforms should focus on environmental justice and enhancing the overall effectiveness of emission reduction strategies.

The California Air Resources Board has been reviewing the possibility of modifying the cap-and-trade program. Recent analyses suggest that California will need to increase its annual emission reductions from the current target of 2.5% to about 8.8% to align with the carbon neutrality goal by 2045.

Although the cap-and-trade program has traditionally generated revenue for environmental projects, recent figures indicate a decrease in annual auction revenues. Over the past year, California has experienced a loss of approximately $3 billion, contributing to its growing budget deficit. This financial shortfall raises questions about how funds from the program can be best utilized.

Concerns have been raised regarding the allocation of cap-and-trade revenue, with some proposals suggesting nearly half the funds go toward projects like the high-speed rail system, rather than immediate carbon reduction efforts. Industry officials worry that reducing or eliminating free credits could result in refineries and large emitters moving out of California, potentially leading to increased costs for consumers and job losses.

Market Confidence and Future Directions

Market confidence in the cap-and-trade program has reportedly diminished, as evidenced by significant unsold credits during auctions. This suggests uncertainty surrounding the future of the program. The Legislative Analyst’s Office has recommended that lawmakers conduct a thorough evaluation of policy options regarding the cap-and-trade reauthorization, given the profound implications it holds.

Several environmental organizations and advocacy groups demand that any reauthorization must guarantee strict emissions limits and equitable enforcement, especially for vulnerable communities adversely affected by pollution.

Conclusion

The debate concerning the cap-and-trade program is set to continue as California grapples with the need for effective environmental policies and legislative action in pursuit of its ambitious climate goals.

FAQ

Deeper Dive: News & Info About This Topic

• Bloomberg Government: California Business Groups Urge Delay on Cap-and-Trade Extension
• Los Angeles Times: California’s Cap-and-Trade at a Crossroads
• Politico: California Climate Newsletter
• Planetizen: California’s Cap-and-Trade Program and Air Quality
• Sacramento Bee: Op-Ed on Cap-and-Trade
• Wikipedia: Cap and Trade
• Google Search: California cap-and-trade
• Google Scholar: California cap-and-trade
• Encyclopedia Britannica: Cap-and-Trade
• Google News: California cap-and-trade

Author: STAFF HERE CORONADO

The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.