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Last year, California took a major step forward in its climate leadership when the Legislature reauthorized the Cap-and-Invest program and directed the California Air Resources Board to ensure it delivers the emissions reductions needed to meet the state’s 2030 and 2045 climate targets.
CARB’s most recent proposal for implementing the program, however, does the opposite: it guts the most essential part of the program — the emissions cap — by making it possible for millions of more emission allowances above the cap to come into the market.
This sudden backsliding proposed by CARB not only blows a hole in the emissions cap — it also threatens the household affordability benefits that make Cap-and-Invest such a powerful tool for California families. CARB needs to fix this before it goes to a Board vote this spring.
Cap-and-Invest works by putting a firm, declining limit on how much pollution covered entities can emit. That limit — the cap — is enforced by issuing a limited number of allowances equal to the cap. Each allowance represents one ton of emissions under the cap, and polluters must turn in allowances to cover their emissions. Since fewer allowances are issued each year, emissions go down as the cap declines. That’s why the level — and integrity — of the cap is the bedrock of this program.
When CARB issued its first formal draft for this rulemaking, they proposed removing 118 million allowances from the 2027-2030 allowance budgets. This is the bare minimum required for California to meet its 2030 target, and a figure not driven by increased policy ambition but by a methodological update to the greenhouse gas emissions inventory.
But in CARB’s April proposal, it claims to remove 118 million allowances from the 2027-2030 budget, then creates an additional 118 million compliance instruments — beyond allowances in the ‘budget’ — to fund a new “Manufacturing Decarbonization Incentive” (MDI) for industry. The result is that the near-term cap, on net, is simply status quo: the reductions CARB needs to make to stay on target are canceled out, allowance-for-allowance, by this new stream of compliance instruments created above the cap. That means covered polluters would be able to emit higher pollution than the cap, and thus the binding, declining limit on emissions which gives this program the greatest possible certainty of meeting our climate targets is in jeopardy.
CARB can and should be doing more than the bare minimum here: modeling shows that removing 180 million allowances from the near-term cap would deliver greater cumulative emissions reductions while still delivering meaningful affordability benefits to California households. Instead, CARB’s April draft moves in the opposite direction by eroding even the bare minimum 118 million reductions that are needed.
In addition to reducing pollution, Cap-and-Invest returns billions of dollars in benefits to California households by raising revenue when allowances are sold at auctions and reinvesting the funds into affordability strategies. For example, California households have already received over $17 billion in utility bill credits through the California Climate Credit — funded by Cap-and-Invest revenues. Cap-and-invest also funds investments in clean energy, public health, and climate resilience through the Greenhouse Gas Reduction Fund (GGRF), which gets revenue from the quarterly auctions of emissions allowances.
Those revenues depend on a healthy allowance market. When the cap is calibrated correctly and allowances are in demand, auctions raise more revenue, GGRF investments grow, and households see bigger credits on their utility bills through the Climate Credit. When the market is flooded with excess allowances, prices fall, revenue dries up, and those benefits erode. Over the past year, auction prices have dropped sharply — they have hovered at the price floor for a year, with one of the last auctions failing to sell out. That means covered polluters are literally paying the lowest possible price for their emissions, and the GGRF is losing revenue, with an estimated $3 billion in lost revenue in 2025 as a result.
CARB’s April proposal makes this problem significantly worse. Forthcoming modeling from Greenline Insights finds that creating 118 million additional compliance instruments above the cap would flood the market, further depressing demand and prices and further reducing the revenue available for GGRF investments and Climate Credit bill savings.
For example, Greenline Insights finds the program is modeled to deliver over $6 billion in net savings to households earning $100,000 or less each year — if CARB preserves the integrity of the cap and actually removes 118 million allowances. But if the new manufacturing incentive creates an extra 118 million allowances, above the cap, those household savings are cut in half. That’s because adding another 118 million allowances to the market is projected to create an oversupply of allowances and result in more undersubscribed auctions.
When auctions don’t sell out, Californians lose the revenue that would have been used to lower their utility bills. A separate analysis from UC Santa Barbara’s Environmental Markets Lab confirms that adding 118 million more allowances to the program via the MDI would reduce funding to the California Climate Credit and the GGRF. If the MDI is fully utilized over the next four years, the study found auction revenues could be cut by $4 billion.
CARB’s April proposal to add extra allowances to the program doesn’t just weaken the cap — it also puts in jeopardy the program’s affordability revenues. At the exact moment California needs to be strengthening this program, CARB is proposing to give billions in additional free allowances to industry at the expense of households.
The good news is that CARB has real options to fix this problem, but it must act fast. The simplest approach is to remove the Manufacturing Decarbonization Incentive from this rulemaking package and take it up properly in the next rulemaking, a process which CARB has already stated will be necessary to deal with post-2030 allowance allocations. Revisiting the MDI in the next rulemaking would give CARB and stakeholders the time needed to design this new feature in a way that helps — rather than hurts — emissions reductions. Given the urgency of finalizing the current rules promptly so they can be implemented this fall, this is the option most likely to result in a final rule that meets the emissions requirements of this program and is implemented on schedule.
If CARB keeps the MDI in this rulemaking, it must be restructured so that the allowances funding the incentive are drawn from under the cap, not created above it.
The clock is ticking for CARB issue an updated proposal with a credible emissions cap aligned with California’s climate targets. That is the program California needs, and CARB should deliver it.
As New Yorkers face rising utility bills and unmanageable prices at the pump driven by volatile fossil fuel markets, now is the moment for New York to hit the accelerator on the clean energy transition promised by the state’s landmark climate law.
Despite this, Governor Hochul has proposed changes to the climate law that would slow progress, putting billions in clean energy investments and health benefits for New Yorkers at risk. These proposals would mean further delay for cap-and-invest, one of the most powerful policies at the state’s disposal to reduce dependence on price-volatile fuels and expand stable, clean energy sources.
Analysis after analysis shows how a strong, well-designed cap-and-invest program — a centerpiece of implementing the law — will cut costs for New York’s working families while cutting climate and air pollution. As discussions on the climate law continue, the questions lawmakers should be asking is how soon New York can stand up a cap-and-invest program to deliver these benefits to their constituents.
New York’s Climate Leadership and Community Protection Act’s (CLCPA) remains one of the strongest climate laws in the country, promising to scale clean, affordable energy and position the state as a leader in cutting climate pollution. The urgency of deploying these solutions couldn’t be more acute. In just the last two months, New Yorkers have spent an additional $900 million on gasoline and diesel.
New York is years behind schedule in implementing this law and, at the precise moment New York should be moving forward, Governor Hochul has proposed changes that would weaken and further delay implementation as part of the state’s budget negotiations. A cap-and-invest program was identified in the state’s Scoping Plan as the most affordable and effective approach to reducing pollution in line with the CLCPA’s targets and raising billions for clean energy and community investments.
The program — which the state previously spent years developing and then shelved — is a central policy tool to slash pollution while cutting costs for the vast majority of New Yorkers. It does this by putting a price on pollution and then investing billions annually to lower costs through utility bill credits, weatherizing homes, expanding heat pumps, EVs, public transit and more.
However, in February, a memo was shared from the New York State Energy Research and Development Authority (NYSERDA), outlining projected cost impacts from a modeled version of a cap-and-invest program that has never been on the table and appears to omit key policy design features that would ensure the program supports affordability for New Yorkers. By presenting misleading cost assumptions — without including the associated analysis — tied to a hypothetical program design, the analysis presents unrealistic impacts.
Analysis from Greenline Insights finds that over its first decade, a cap-and-invest program, as previously designed by DEC and NYSERDA, would generate $6.9 billion in cumulative net savings for households earning $200,000 or less — roughly $1,060 per household. Nearly 85% of New Yorkers fall within this income range. The report also finds that the program would result in $47.5 billion in statewide economic growth and more than 300,000 new jobs.
In February, a report was released further exploring the cost-savings and community benefits of this program. It finds that cap-and-invest would turbocharge a range of efficiency and clean energy programs that further drive down costs. For example, a cap-and-invest program would help families upgrade to heat pumps and rooftop solar, saving them up to $3,300 annually.
Both reports build on a strong, established body of research, from both independent sources and from the state itself, which demonstrates that a thoughtfully designed cap-and-invest program would ensure the vast majority of New Yorkers break even or see net savings as a result of the program — a stark contrast from NYSERDA’s most recent memo.
By making polluters pay for their emissions, a cap-and-invest program would raise significant funds for investment in direct rebates on bills, clean energy upgrades and energy efficiency programs that deliver tangible economic and health benefits to households. Many such programs exist today and could be substantially scaled and expanded with cap-and-invest, helping more New Yorkers realize these benefits.
For instance, programs like Empower+ and the Green Small Buildings Program provide energy efficiency and clean energy upgrades. One Bronx resident enrolled in the program reported that, thanks to free upgrades like weatherization and insulation through Empower+, their heating bills have been cut in half. A cap-and-invest program would enable hundreds of thousands more New Yorkers to experience the same comfort and bill saving benefits provided through programs like Empower+ and others.
Beyond economic gains, climate action would deliver profound public health benefits across the state. Analysis from DEC and NYSERDA finds that by slashing health-harming pollution, a cap-and-invest program would deliver up to $13 billion in annual health benefits by 2035 and prevent over 1,000 deaths and 1,800 emergency room visits from asthma.
Cap-and-invest is a proven policy, familiar to New York. As a result of the Regional Greenhouse Gas Initiative, New York ratepayer savings are expected to reach nearly $12 billion, representing a six-to-one return on approximately $2 billion invested to date. These savings benefits would scale with a statewide program. And from Virginia rejoining RGGI, to California extending its program through 2045, to Washington voters defending their program at the ballot box by a 24-point margin, there is no shortage of examples on how well-designed programs are effective and popular.
New Yorkers recognize the benefits of investing in clean energy and climate action. Recent polling found that the majority of New Yorkers in competitive districts from Long Island to Buffalo support cap-and-invest. What’s more, the majority of those surveyed also expressed that in upcoming elections they’d be more likely to vote for a state legislator who voted to continue implementing New York’s clean energy laws. With cleaner air, more jobs and lower energy bills on the line, it’s no surprise that New Yorkers support scaling up clean energy.
With a thoughtfully designed cap-and-invest program, New York can cut energy bills and generate billions in economic activity — all while cutting pollution and delivering cleaner air for the Empire state. Lawmakers in New York can cement these benefits for their constituents by ensuring that any amendments to the climate law require cap-and-invest regulations in the next year.
New Yorkers: Tell your state leaders to stand firm on climate!
Cap-and-Invest is California’s most cost-effective program to reduce climate-altering pollution while keeping costs down for families. Meeting this responsibility in the near-term falls on the California Air Resources Board’s (CARB) rulemaking process.
Modeling shows CARB can deliver:
✅ Pollution cuts — 180 million tons of emissions between 2027-2030
✅ Affordability gains for working Californians — $2.8 billion for families earning $70,000 or less
✅ Funding to support the Greenhouse Gas Reduction Fund — $1.4 billion more through 2045
The price of emissions per ton in the Cap-and-Invest allowance market have hovered at or slightly above the price floor this past year, showing a tighter cap is the logical next step to recalibrate benefits from Cap-and-Invest.
The extension of Cap-and-Invest through AB 1207 last year requires the program, at a minimum, to align with the achievement of California’s emissions reduction targets for 2030 and 2045. In 2024, CARB estimated 265 million tons in pollution cuts were necessary to align with the 2022 Scoping Plan — nearly double the amount now proposed.
California has a proven track record of reducing emissions while growing the state’s economy. From 2000-2023, the state’s emissions fell 21% while the California economy grew 81%. As federal leaders double down on failed policies deepening our reliance on volatile energy sources that squeeze our wallets and fuel the climate crisis, California can continue showing another way is possible.
California just took a vital step to increase transparency around corporate climate risks, helping investors and consumers make more informed decisions in a changing climate. Better information helps markets price risk more accurately, protects people’s retirement savings and rewards companies that are better prepared for a low-carbon future.
On February 26, the California Air Resources Board unanimously approved initial rules implementing the state’s landmark climate disclosure laws. The laws require large companies doing business in California to publicly report their greenhouse gas emissions and disclose the financial risks climate change poses to their operations. The first emissions reports are due August 10, 2026.
California’s disclosure program addresses a growing market problem: amid intensifying climate impacts, investors, regulators and consumers often lack reliable information about companies’ greenhouse gas emissions and climate-related risks and opportunities. That matters not just for markets in the abstract, but for people’s real financial security — including pension funds and 401(k)s that depend on sound investment decisions. By requiring consistent reporting from large companies operating in the state – the world’s fourth-largest economy – California is providing better information for investors, clearer expectations for businesses and stronger protections for Californians.
Millions of Americans rely on financial markets for retirement security. Pension funds and 401(k)s invest trillions in companies, but without reliable data, investors cannot accurately price climate-related risks or opportunities. Recent events highlight the stakes:
As climate impacts accelerate – and markets respond – investors need clear information to distinguish between companies facing rising financial risks and those positioned to succeed by leading on clean solutions and resilience. Climate disclosure standards help close that gap. Better information allows markets to price climate risk more accurately, helping investors make well-informed decisions and protecting the retirement savings of millions of workers and families.
Knowing that many consumers prefer climate-friendly businesses, companies are marketing themselves accordingly. But these claims are not always reliable. In one anonymous survey of corporate executives, a majority acknowledged their companies had engaged in some form of greenwashing. Disclosure standards help change that by enabling consumers to vet marketing claims with comparable, verifiable data.
Many major companies already disclose detailed emissions data and climate strategies because transparency builds trust with customers, investors and employees. California’s rules create consistent expectations for all large companies operating in the state, creating a more level playing field and rewarding real leadership.
Transparency doesn’t just inform markets – it can drive action. Research consistently shows companies tend to reduce emissions once they begin measuring and publicly reporting them. When emissions data becomes visible:
We have seen this dynamic before. When the U.S. Environmental Protection Agency created the Toxics Release Inventory in the 1980s, companies sharply reduced toxic pollution once emissions data became public. Other disclosure programs around the world have produced comparable results.
California designed its disclosure program around frameworks many companies already use. The rules align with established standards such as the Greenhouse Gas Protocol and the Task Force on Climate-related Financial Disclosures, giving investors and consumers consistent data to evaluate corporate climate performance and progress.
The rules also align with existing reporting timelines and requirements in California, reducing duplication for businesses. CARB built flexibility into the first year of implementation, allowing companies to demonstrate “good-faith efforts” to comply using available data while they strengthen reporting systems. For companies already leading on climate, greater transparency becomes a competitive advantage.
As climate disasters cause increasing destruction across the United States and the transition to clean, affordable technologies continues, California is stepping up to provide the clarity investors, companies and consumers need. Thousands of the largest companies doing business in the state will now report consistent data on their greenhouse gas emissions and climate-related financial risks. That transparency strengthens markets, rewards responsible companies and helps investors manage risk in a rapidly changing climate.
Coauthored by Zachary Decker
The Trump Administration has a record of disregard for programs that support human life, safety, and public health. Now, it is targeting a research center that everything from our military to the insurance industry to our electricity providers rely on to keep us safe and informed.
The National Center for Atmospheric Research, a federally-funded nerve center in Boulder, Colorado, is a textbook example of government serving the public interest. Office of Management and Budget Director Russ Vought has indicated the Trump administration’s intention to “break up” NCAR, calling it one of the main centers of “climate alarmism.” But environmental security without NCAR would be like trying to run a marathon blindfolded, without coordinating our feet.
The Trump Administration thinks it’s in the national interest to cut NCAR’s programs and scope and that its value to all Americans can be preserved if it’s broken up and scattered. This is why they’re wrong.
In 2024 alone, the United States suffered 27 separate billion-dollar weather and climate disasters causing ~$182.7B in damage and at least 568 deaths; and since 1980, cumulative losses exceed $2.9T. Silencing the science doesn’t turn down the risk; it just blinds the people who must manage it.
These risks are highly interconnected, which is why NCAR is so valuable. NCAR is much more than a single laboratory: it is the backbone of U.S. environmental intelligence, an integrated hub of supercomputers, aircraft and open community models, where a research-to-forecast pathway converts science into action.
With an annual budget of $125 million, NCAR contributes to the science infrastructure that generates over $31B in benefits each year, while costing less than 0.1% of the U.S. weather and climate disaster losses in 2024. Included in its mandate:
When Americans check the weather, evacuate from wildfire smoke, harden military infrastructure, or watch a hurricane’s cone of uncertainty, they are leaning on NCAR’s work. NCAR serves actuaries and reinsurers, the aviation industry, emergency managers, utilities and power grid planners, as well as thousands of scientists in diverse fields. As damages from extreme weather like floods, hurricanes and wildfires increase year after year, it’s clear that threats from climate change will continue to threaten lives and livelihoods.
Now to consider the second assumption — that NCAR could be dismantled, with “vital functions,” like weather prediction, simply reassigned elsewhere.
NCAR’s unique value is the exact opposite of modularity: its real strength is not any single instrument or program but the way it fuses them into a unified Earth system engine. Its community of modelers, field scientists, aircraft engineers, pilots, and supercomputing experts work collaboratively—with hundreds, if not thousands of external researchers and businesses — to turn raw data into lifesaving forecasts. Access to NCAR’s “community models” and data is free and accessible to all, and used by scientists, experts, public agencies, and the private sector to improve, enhance, or utilize to protect American lives.
Even across programs, NCAR’s systems are interconnected. The same framework that helps us understand hurricane intensity and coastal flooding also supports better simulation of atmospheric rivers and their rainfall, which is critical for water supply planning for over 50 million people in the American West. That framework also powers the model used to assess marine heatwaves, fisheries stressors and coastal resilience worldwide. At the same time, NCAR’s model used for severe storms, wildfire behavior, and smoke transport is tightly connected to its chemistry and air quality research; and its space weather models depend on coordinated observations and high-end computing. All these capabilities are sustained by shared aircraft, the NCAR Wyoming Supercomputing Center and expert teams working together.
This produces an integrated architecture that underpins flood and air quality alerts, informs insurance and reinsurance risk modeling, supports national security planning, and trains the workforce for federal government agencies, tribes, states, and private firms. Fragmenting NCAR would fracture those connections and deliver less.
NCAR can and should keep evolving — to modernize, streamline and maximize its ability to adapt to a world of changing risks. But any good faith modernization should start from a recognition of its value and what makes it work. We should embrace and double down on NCAR’s mission of science in service to society, seeking to understand hazards and enabling tools to save lives and prevent costly losses. We should recognize the importance of integration, affirming NCAR’s unified mission and invest in what makes it uniquely valuable.
Today’s existing weather and future climate trajectory will expose Americans to severe risks. Dismantling NCAR will leave many sectors flying blind. NCAR is an essential part of our intelligence and ability to prepare and respond. It is also the product of decades of investment by scientists, state and local governments, the private sector, universities, and U.S. taxpayers. At its heart, it’s our center. Dismantling it would be a generational mistake.
Results were released today for the first auction of the year, and 13th overall, in Washington’s Cap-and-Invest program. With prices down over $5 from Washington’s last auction, today’s results may be a reflection of covered entities’ growing confidence in a future linked market, following on the release last week of a draft linkage agreement between Washington, Québec and California.
The auction showed a continuation of the strong demand seen in all of Washington’s auctions thus far, and is projected to generate $183 million in revenue for investments in communities, affordability and climate resilience in Washington State.
Washington’s Cap-and-Invest auctions are administered quarterly by the Department of Ecology (Ecology). During the auction, participating entities submitted their bids for allowances. Under the Climate Commitment Act — Washington’s landmark climate law that sets a binding, declining limit on pollution — major emitters in Washington are required to hold one allowance for every ton of greenhouse gas they emit, with the total number of allowances decreasing each year. This system requires Washington’s polluters to reduce their emissions in line with the state’s climate targets, as fewer allowances become available annually.
Today’s results come just over a week after the release of a draft linkage agreement between California, Washington and Québec. The decline in auction prices seen in today’s results may be a reflection of improved confidence among covered entities that, upon finalization of linkage processes in each jurisdiction, they will have access to a larger pool of allowances from a future joint market with California and Québec.
California and Québec have shared a linked market for over a decade, demonstrating that well-designed linked cap-and-invest programs can lead to deeper pollution cuts while supporting economic growth. Adding Washington to this established partnership would build on a proven model and strengthen the programs of all participants. Merging into a larger market would likely lead to more stable, predictable allowance prices, which is crucial for polluters to make decisions about compliance planning and investing in decarbonization.
Washington has been making steady progress towards their linkage rulemaking, which they’re expecting to finalize in mid-2026. California has been working to update their own program rules, including updating their emissions allowance budgets, and is expected to take up its own linkage process this year as well. Linkage is a key opportunity for climate leadership for both states, to take a step that will strengthen one of our best and most cost-effective tools to reduce emissions and raise revenue for community investments.
With a draft agreement now published, Washington, California and Québec are taking a significant step towards market linkage and stronger programs that can drive long-term emissions reductions with greater certainty. Washington’s Department of Ecology is taking public feedback on the draft through May 1, and the linked market could launch as early as 2027. The need for scalable, durable climate action at the state level has never been greater, and these jurisdictions are showing how working across borders can drive meaningful progress.
