Will California extend cap and trade? Legislative negotiations go down to the wire

California lawmakers are scrambling to finalize a last-minute deal that would extend the state’s landmark greenhouse gas reduction program – known as cap and trade – through 2045.

At the center of this year’s reauthorization fight are a number of controversial concessions that former Gov. Jerry Brown gave to various industries — including oil and gas — when the Legislature last renewed the program in 2017. Those include giveaways that allow fossil fuel companies and others to emit greenhouse gases free of charge, as well as permission for some market participants to purchase questionably effective carbon offsets to meet emissions targets.

To the chagrin of environmental advocates, Gov. Gavin Newsom earlier this summer proposed reupping the program as-is, an early sign of his blossoming friendliness with the fuel industry as he eyes a presidential bid in 2028.

The twist? There’s no bill. And even if the text of legislation comes out by the Wednesday deadline to introduce it, opponents argue that such a critical policy should not be rushed through at the last minute.

“We are in the last week of session, and no one has seen the language of what a program would look like,” read a pamphlet that lobbyists from the business community were circulating to members in the Capitol on Monday. “Rushing a bad deal to determine the next 20 years of climate policy is the wrong approach.”

Even some environmental advocates who want to see the program renewed have griped about the opacity of the negotiations, which have primarily unfolded behind closed doors. While the Assembly has circulated draft language that closely resembles Newsom’s proposal, the Senate has kept its language under lock and key. According to two people familiar with the negotiations, Senate President Pro Tem’s Mike McGuire’s staff has only allowed members to view the proposed legislative text in person and prohibited them from taking copies — printed, digital or photos — back to their staff.

Environmental justice advocates have long criticized the cap-and-trade program for failing to reduce pollution at refineries and other industrial sources, which are often in low-income and minority communities. Because cap and trade allows companies to comply with greenhouse gas limits by buying credits, large polluters can continue operating in low-income neighborhoods without improving air quality or reducing emissions

Proponents of swift reauthorization say the carbon market needs certainty that the program will continue to exist in order to keep pulling in revenues. Over the past 11 years, almost $13 billion from cap-and-trade auctions has paid for electric vehicles, public transit, clean energy and other projects to reduce greenhouse gases and adapt to climate change.

A flurry of appeals to lawmakers

As lawmakers entered the Capitol on Monday, a welcoming committee of lobbyists and advocates descended on them, armed with pamphlets urging the members to halt negotiations over cap and trade and kick the conversation to next year.

The opponents included representatives from the fossil fuels industry, business groups and even the state’s influential trade unions, who often have the ear of Democrats in Sacramento but many of whose members are employed by the oil and gas industry and other major polluters.

They argued that a rushed plan to reauthorize cap and trade would unnecessarily raise costs on industries including cement production and oil and gas and manufacturing and push them out of California. That, the groups argue, would result in job losses as well as higher prices as companies pass their increased costs along to consumers.

“No deal is better than a bad deal,” read a notice sent to members from the State Building and Construction Trades Council of California and obtained by CalMatters. “Negotiations on this complex and essential policy should be halted and picked back up in the earliest days of 2026 when the Legislature reconvenes.”

The union argued that the Legislature’s proposals would lead to “massive industrial job losses” and “skyrocketing fuel and retail costs” that would harm California families.

“We are disappointed that the Legislature has not been able to work with the Building Trades and the energy industry to advance a clean extension of cap and trade that prioritizes affordability,” the pamphlet read.

The California Chamber of Commerce, a business advocacy group that often finds itself on the opposite side of the trades union, agreed that the shortened timeline wasn’t sufficient to produce a “robust and responsible” piece of legislation.

“For months, we have heard promises that issues affecting California’s affordability were at the top of the list,” said Jennifer Barrera, group’s president and CEO. “But this vital issue will have to wait.”

While mainstream environmental groups like Environmental Defense Fund generally support reauthorizing the program, they’re irked about the obscure nature of the negotiations. Meanwhile, environmental justice advocates say that the flood of last-minute lobbying to delay the reauthorization came because they were finally making progress at the negotiating table.

“They’re saying that because they’re losing ground,” said Katie Valenzuela, a lobbyist for environmental justice groups. “These folks have unprecedented access to members in the building, and so for them to argue that there needs to be more public process is just comical.”

“Everyone is still at the table and working toward a negotiated proposal,” said Santa Barbara Democratic Sen. Monique Limón, the incoming Senate president. “So long as everyone is still working collaboratively, the possibility to get this done remains.”

This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.