Cap and trade: Emissions reductions at low cost

A key tool for meeting California's AB 32 emissions goals

California’s cap-and-trade program, which began on January 1, 2013, is a crucial part of Assembly Bill 32 (AB 32), the state’s pioneering Global Warming Solutions Act. Cap and trade acts as a “safety net,” ensuring that the state reaches its climate goals even when the reductions from other policies under AB 32 fall short. California Air Resource Board (CARB) approved Scoping Plan, the blueprint for reducing the state's greenhouse gas (GHG) emissions to 1990 levels by 2020, or about 16% below the business-as-usual level.

Developed in 2008, the Scoping Plan contains the main strategies for California to cut climate change pollutants, including direct regulations, incentives, voluntary actions, and market-based mechanisms such as the cap-and-trade system. CARB continues to work to ensure effective and adaptive policy design in the Scoping Plan and every five years must formally update the plan. The first set of revisions to the AB 32 Scoping Plan began in 2013 and is expected to be adopted in 2014. EDF considers cap and trade the cornerstone of California's long-range effort to spur innovation, attract investment, grow jobs, and reduce harmful emissions at the lowest possible cost.

Cap-and-trade program design

CARB worked closely with stakeholders to design a cap-and-trade program that is enforceable and meets AB 32 requirements, including the need to prevent adverse impacts on communities historically burdened by pollution and to avoid relocation of jobs to states with less stringent climate laws.

In November 2010, CARB released a preliminary draft version of California's cap-and-trade regulation. In 2011, CARB finalized and officially adopted the regulation. On January 1, 2013 the program officially commenced.

Our policy analysts, legal experts, and economists provided recommendations on a range of subjects, including program scope, carbon accounting, offsets, cost containment, community benefits, and enforcement. We are continuing to work with CARB to provide science-based expertise that supports due diligence and the rule-making process.

Regional cap-and-trade program ensures reductions at low costs

Throughout the design of the state’s climate pollution regulation, California has collaborated with several other jurisdictions around the world to support the design of linked cap-and-trade programs. California’s program was officially linked with Quebec’s program on January 1, 2014. 

The opportunity for linkage, enabled by harmonized program design, promises to deliver greater regional emission reductions at lower costs than could be realized through a California-only program. EDF is also working to support the successful design and implementation of other programs across the world that may be able to effectively link to achieve maximum environmental and economic benefits.