Results were released today for California’s second cap-and-trade auction of the year, and the first auction since Governor Newsom proposed extending California’s cap-and-trade program through 2045 as part of his May budget proposal. As California lawmakers consider the future of the cap-and-trade program, they face a pivotal opportunity to deliver real and lasting benefits to communities across the state. At stake is not only California’s continued leadership on climate, but also the potential to unlock major economic and affordability gains for Californians.
Today’s auction results show another dip in prices and loss of important revenue, driving home the very real cost of uncertainty around the reauthorization of this program beyond 2030, despite the Governor’s proposal to extend it in the May Revision of the FY 2025–2026 budget. This auction generated roughly half as much revenue for the Greenhouse Gas Reduction Fund (GGRF) as the May 2024 auction — and that revenue is critical for California communities. A new report published this month by Environmental Defense Fund and Greenline Insights shows just how much Californians stand to benefit if the state extends and strengthens the cap-and-trade program beyond 2030. The results are clear: with smart, ambitious policy, California can cut pollution while growing the economy, creating good-paying jobs and making the state more affordable for working families.
May auction results
- 43,865,000 of the 51,069,285 current vintage allowances — emission allowances valid for compliance this year — offered for sale were purchased, resulting in the first under-subscribed quarterly auction since August, 2020. Roughly 85% of current vintage allowances were sold.
- The current auction settled at the price floor of $25.87, and $3.40 below the February 2025 settlement price of $29.27.
- All of the 6,847,750 future vintage allowances offered for sale were purchased. These allowances can be used for compliance beginning in 2028. This is the same number of future vintage allowances that were offered at the previous advance auction.
- Future vintage allowances settled at $26.15, $0.28 above the $25.87 price floor and $1.85 below the February settlement price of $28.00
- This auction is expected to generate roughly $595 million for the Greenhouse Gas Reduction Fund. This is another significant drop in revenue from the February auction, which generated roughly $851 million, and is a reduction by nearly half compared to last May’s auction which raised $1.1 billion.
Uncertainty is costing California communities
As we saw in February’s auction results, the continued uncertainty around when and how this key program will be extended continues to put a damper on near-term allowance price demand (though future vintages did sell out), significantly driving down revenue to the GGRF and hurting the state’s ability to invest in communities and climate resilience. Swift and ambitious action is urgently needed to give market participants certainty and bolster the revenue that delivers huge benefits to Californians.
Cap-and-trade revenue saves money for households
A new report released earlier this month by EDF and Greenline Insights shows just how important the revenue from these auctions is for spurring economic and job growth and delivering savings to consumers. The analysis shows that, on top of cutting pollution, a strong cap-and-trade program is a powerful economic driver. Extending the program beyond 2030 would deliver meaningful savings for households, help generate well-paying jobs and stimulate local economies across the state. According to the new analysis, program extension could:
- Save families $3.9 billion, including nearly $700 per household for those earning under $70,000 per year.
- Deliver $2.2 billion in savings for the vast majority of California families.
- Create 287,0000 new jobs, with average wages of $93,600.
- Generate $55 billion in statewide economic growth, with top gains in Los Angeles, Orange, Kern, Fresno and Alameda counties.
Increasing the program’s ambition could amplify these benefits, further building on the momentum already underway. Last week, the California Air Resources Board released its annual California Climate Investments report, highlighting that the state has invested nearly $33 billion from its cap-and-trade program into critical climate initiatives across California. These investments span across critical climate and community priorities, including affordable housing, building decarbonization, and climate resilience. On top of that announcement, Governor Newsom was named co-chair of the U.S. Climate Alliance, reaffirming California’s role as a national and global leader in climate action. This is a clear moment for California climate leadership, and legislative reauthorization offers a key opportunity to both extend and further strengthen this landmark program.
Next steps
California lawmakers now have the chance to not just reauthorize the cap-and-trade program beyond 2030, but to strengthen it — delivering even greater benefits to California communities. The EDF/Greenline report shows that strengthening the program’s ambition could generate more revenue for clean energy and affordability programs, deliver greater savings to families, and create more good-paying jobs in every corner of the state.
To achieve those outcomes, lawmakers must ensure that the statute provides clear direction about the ambition of the ‘cap’, or the state’s overall limit on greenhouse gas pollution. That means aligning the program’s declining emissions limit with California’s 2045 carbon neutrality goal and setting a cap trajectory that ensures emissions fall in line with the state’s broader climate targets.
But ambition on paper isn’t enough. Reauthorization must be accompanied by a swift regulatory process so that updated rules are in place and regulators are ready to implement a reauthorized program. As we saw in last quarter’s results, delays to reauthorization or to the rulemaking process contributes to market uncertainty, loss of revenue to the GGRF, and missing critical years of progress for emissions reductions.
This moment demands leadership. California has shown the nation what bold climate policy can look like. Now, lawmakers must build on that legacy by fighting for a stronger cap-and-trade program that invests in the health, prosperity, and resilience of all Californians.