CSAC Advocates for Local Government Priorities During Cap-and-Trade Reauthorization Negotiations 

California’s Cap-and-Trade program is a key policy used to reduce greenhouse gas (GHG) emissions from top polluters by setting a declining cap on allowed emissions and permitting businesses to buy and trade allowances. A portion of these emissions allowances is distributed through quarterly auctions, while others are allocated at no cost to certain entities such as electrical utilities, natural gas providers, and others. The no-cost allocations aim to shield consumers from sharp increases in energy costs and discourage businesses from relocating out of state to avoid compliance. 

Proceeds from the Cap-and-Trade auction fund the Greenhouse Gas Reduction Fund (GGRF), which has generated roughly $30 billion over the past decade. These revenues have supported a variety of projects across the state that protect public health, reduce GHG emissions, conserve natural resources, and more. With Cap-and-Trade set to expire in 2030, California lawmakers have been meeting for months to determine the terms of reauthorization and the future allocation of the GGRF. 

CSAC, along with other local government, transportation, and labor partners, has aligned on broad climate-safe funding priorities for GGRF. Together, we have urged state leaders to invest in proven projects that make Californians safer and more resilient to climate change, achieve the most significant emissions reductions, and support middle-class jobs. 

CSAC is specifically advocating for greater GGRF allocations to local governments to fund clean transportation, affordable housing, climate adaptation activities (including flooding and sea level rise adaptation), wildfire resiliency, and implementation of the state’s Short-Lived Climate Pollutant Reduction Strategy to divert organic waste from landfill. These areas are critical to protect Californians from worsening climate conditions and maximizing emission reductions, while helping local governments meet the state’s ambitious climate goals.  

Transportation and Housing 

The Challenge: Transportation is responsible for nearly 40% of California’s greenhouse gas emissions. A shortage of over 1 million affordable homes forces long commutes, increasing emissions and straining transit systems. 

Wildfire Resilience:  

The Challenge: Wildfires are growing more frequent and severe, fueled by climate change and drought. One in eight Californians live in high-fire risk zones, highlighting urgent needs for better prevention and response.  

Organic Waste and SB 1383 Compliance 

The Challenge: SB 1383 (Lara, 2016) sets a statewide goal to reduce organic waste sent to landfills by 75% by 2025 to cut methane emissions. Local governments and ratepayers bear most costs, with total statewide expenses expected to reach nearly $40 billion by 2030. 

Sea Level Rise and Flooding Climate Adaptation 

The Challenge: By 2050, sea level rise could flood an estimated $17.9 billion in California properties, and a 100- year coastal flood event could nearly double that damage. 

In April, state leadership announced they would seek legislative reauthorization this year.  While the next Cap-and-Trade quarterly auction is scheduled for August 20, 2025, uncertainty around reauthorization is expected to impact auction revenues negatively. A long-term deal wasn’t included in the final 2025-26 budget. It is unclear when an agreement will be reached, with the legislative session set to adjourn for interim recess on September 12.  

CSAC will continue to advocate for local governments’ priorities during these ongoing deliberations. Counties can help elevate these issues by sending letters of support to their state representatives and key legislators engaged in these policy discussions. A customizable sample letter is available to help counties explain how this critical funding would support their efforts to meet California’s climate objectives. 

If you have any questions, please contact Jordan Wells, CSAC Legislative Advocate, at jwells@counties.org.