California extends cap-and-invest to 2045, renaming program

California Gov. Gavin Newsom on Friday extended the state's signature program aimed at curbing planet-warming emissions through 2045, renaming it cap and invest. The program, originally set to expire after 2030, imposes a declining cap on greenhouse gas emissions from major polluters who must cut emissions, buy allowances, or fund projects intended to offset pollution.

The new law ties the extension to California's goal of carbon neutrality by 2045, a target that requires the state to balance emitted and removed carbon. Revenue from the program will fund climate-change mitigation, affordable housing and transportation projects, as well as utility bill credits for Californians. Newsom announced the measure at the Morrison Planetarium in San Francisco and said the effort would strengthen the state's ability to support carbon-removal projects and address pollution burdens in affected communities. “We’re doubling down on our best tool to combat Trump’s assaults on clean air — Cap-and-Invest — by making polluters pay for projects that support our most impacted communities,” Newsom said.

Beyond the cap-and-invest extension, Newsom signed a package of related measures. One law commits about $1 billion in program revenue to California's long-delayed high-speed rail project, and another $800 million toward an affordable housing program. A third measure allocates $250 million for community air protection programs, with $1 billion set aside for annual decisions by the Legislature on how the fund is spent. Officials said the package also includes moves to accelerate oil-permit approvals in Kern County, replenish a wildfire-damage fund financed by utilities, and allow the state's grid operator to partner with a regional group to manage power markets across the western United States.

Newsom also signed legislation aimed at strengthening environmental watchdogs and monitoring. One measure increases requirements for air monitoring in communities burdened by pollution, and another codifies a Justice Department bureau created in 2018 to defend residents from environmental injustices. Taken together, the measures reflect a broader effort to accelerate the state's energy transition while trying to keep costs under control for households and small businesses.

Californians have long grappled with high energy and fuel prices, a problem that lawmakers say is tethered to the state's energy mix and ongoing shifts in refining capacity. State officials note that two oil refineries in the state are slated for closure, a development that could further strain supply and push prices higher. The closures, along with the broader transition away from fossil fuels, have put pressure on regulators to stabilize costs while maintaining environmental goals. Some critics warn that cap-and-trade schemes tend to raise costs for consumers, even as supporters argue the programs drive investments in clean energy and public goods.

Advocates for environmental justice say the cap-and-invest extension does not go far enough to address air pollution burdens borne by low-income Californians and communities of color located near industrial facilities. The program's cap covers greenhouse gases but not other pollutants that affect air quality, and opponents warn that credits and offsets can allow polluters to maintain emissions while still meeting overall targets. A February report from the Independent Emissions Market Advisory Committee estimated the program has added roughly 26 cents to each gallon of gasoline on average, though it found electricity prices have risen only modestly because the state's grid remains less carbon-intensive than many others.

Republicans criticized the extension as an economic drag. State Sen. Tony Strickland said extending cap-and-trade amounts to an “economic sabotage” that would raise costs on gas, groceries and other essentials. Democratic Assemblymember Jacqui Irwin, who wrote the reauthorization bill, defended the move as necessary to address climate change and highlighted wildfire risk in her district. Daniel Barad, who leads western states policy for the Union of Concerned Scientists, said the extension comes at a critical moment when federal rollbacks threaten California's authority to enforce environmental safeguards.