California Spends $1.3 Billion From Cap-And-Trade On Climate Action Projects

By Ria Roebuck Joseph | The Center Square contributor, The Center Square California

April 19, 2023

(The Center Square) - In 2022 California spent $1.3 billion dollars on nearly 19,500 projects to cut pollution and transition to zero emissions vehicles. Projects in communities with households facing greater economic and environmental challenges, consumed 74% of the budget.

The California Climate Investments report declares, “Across California, 75 California Climate Investments programs administered by 23 state agencies are continuing to direct billions of dollars into the state’s transition to a low-carbon and more equitable future.”

California communities disproportionately lacking the capacity to invest in low-carbon practices, transportation, or climate resiliency, or those with exposure to multiple sources of pollution, have been named as priority populations and targeted for a greater percentage of revenue.

“Programs are reducing GHG (greenhouse gas) emissions by providing incentives for zero‐emission vehicles and equipment, increasing clean mobility options through transit and active transportation projects, diverting organic waste from landfills to composting, and more,” the report touted.

The implemented projects that cost nearly $1.3 billion, in addition to $1.3 billion in expenditures by the High‐Speed Rail Project have all been funded from the auction of emission permits in a cap-and-trade process.

Cap-and-trade is a system where the government allows companies to emit a certain amount of carbon dioxide and global warming pollutants for a fee.

A limit or “cap” is set by a government entity, with the total amount being divided into equal parts called allowances. Each allowance is then auctioned off but the number of permits issued each year are lowered. That makes the permits more costly to businesses wanting to buy them, while at the same time, it lowers the total emissions cap. The increasing reductions in the amount of allowances also increases the price. Companies that exceed the allowance are taxed while those who have more than they need can sell or trade them.

To date California has invested more than $9.3 billion to pay for plug-in or zero emissions hybrids, transit services, affordable housing units, restoration of land, planting trees and supporting employment opportunities.

The focus of the work of The Center Square California is state and local-level government and economic reporting that approaches stories with a taxpayer sensibility.