Legislators now face a clear choice: act this year to reauthorize and strengthen Cap-and-Trade — keeping energy affordable, generating billions for clean investments, and reaffirming California’s global climate leadership — or allow inaction to raise costs, erode billions in revenue, and undermine the state’s competitive edge.
California’s history shows that looking ahead fuels prosperity. Today, clean energy is that future—and cap-and-trade is the tool that ensures California stays ahead. Billions in capital are flowing to regions offering certainty, speed, and scale for clean energy and advanced manufacturing. Unless lawmakers act quickly, California risks losing its edge.
By rejecting the Assembly’s proposal and holding back a compromise of their own, the Senate has fueled uncertainty that threatens both affordability and innovation. The August quarterly action underperformance shows the market still holds substantial reservations that cap-and-trade extension will occur this year, especially with the absence of a clear Senate proposal.
With only days left to secure extension this year, lawmakers should be dedicated to keeping California at the forefront of the 21st century economy. For more than a decade, cap-and-trade has delivered results—over $31 billion in revenue for investments that expand renewable generation, build zero-emission freight corridors, modernize manufacturing, and provide energy bill relief to households and small businesses. At least 35% of these funds support disadvantaged communities, ensuring that economic opportunity is more broadly shared while improving local air quality and infrastructure.
The program’s market-based design also sends a significant signal to investors: California is serious about long-term economic transformation. When companies consider where to locate a factory, launch a new product line, or pilot a cutting-edge technology, they look for stability. They need to know that the policies shaping the market will be in place long enough for investments to pay off. Right now, that certainty is at risk. Quarterly auction proceeds are down nearly 40% from previous years, and a recent Clean and Prosperous California analysis found that the state may have lost up to $3 billion in revenue over the past year due to legislative inaction. Without a clear path forward, private capital will flow elsewhere.
That’s why more than 40 businesses, associations, and investors — representing more than 1,000 companies — recently came together to call for swift reauthorization. Their ranks include IKEA U.S., Advanced Energy United, Phillips 66, and other industry leaders who understand the connection between policy stability and investment growth. These companies are investing in zero-emission fleets, renewable generation, advanced fuels, and efficiency upgrades — all projects that create jobs, reduce costs, and strengthen California’s competitiveness.
The economic case for reauthorization is undeniable. Extending the program for another 20 years could unlock an additional $47 billion in auction-funded investments, create more than 287,000 jobs, and generate roughly $55 billion in total economic output. In an era of tight budgets, we must act to keep energy costs in check, deliver billions in clean investment, and ensure California continues to lead the world toward a stronger, more affordable clean energy economy.
The choice is clear: extend and strengthen cap-and-trade this year to keep California competitive, affordable, and leading the clean energy economy. Businesses, investors, and communities are ready—now lawmakers must match that readiness with action.