Extending Cap-and-Trade Program Saves Working Families $3.9 Billion, Creates 287,000 Jobs and $55 Billion in Economic Growth

SACRAMENTO — As state lawmakers strive to extend California’s cap-and-trade program this year, a new report from Environmental Defense Fund and Greenline Insights found extending the program through 2045 will bring significant economic gains for Californians. 

“The report findings are clear: lawmakers must act without delay to extend and strengthen this critical program. Let’s continue to lead the world in economic prosperity and climate action,” said Katelyn Roedner Sutter, California State Director at Environmental Defense Fund. “State leaders are rightly focused on making California a more affordable place to live. This report shows extending cap-and-trade will not only lower costs for families but that a stronger pollution cap further increases these benefits. The choice is clear for California — it’s time to act.”

By extending cap-and-trade to 2045, which coincides with California’s timeline to build a 100 percent clean energy economy, the report found: 

• $3.9 billion in net savings for California’s most economically vulnerable families (nearly $700 for families earning $70,000 or less, or 42 percent of families overall) and $2.2 billion in net savings for the vast majority of families (nearly $200 for families earning $200,000 or less, or 85 percent of families overall)

• 287,000 jobs created by cap-and-trade program investments — primarily in construction, agriculture and forestry, local transit, architecture, and engineering — with an average salary of $93,600

• $55 billion in total economic growth supported by cap-and-trade investments across all 58 counties, with the greatest amount of growth occurring in Los Angeles County ($13.9 billion), Orange County ($3.2 billion), Kern County ($3.2 billion), Fresno County ($2.7 billion), and Alameda County ($2.7 billion).

“California’s leaders can confidently extend cap-and-trade because the program is a proven cost cutter for families while contributing to California’s prosperity,” said Jonah Kurman-Faber, Greenline Insight's Founder and Principal and an author of the study. “The vast majority of California’s families come out ahead, and working families with lower incomes come out way ahead. The data disproves claims this program does the opposite.”

“As the Legislature and Governor currently negotiate how to reauthorize the program, the findings in this report should be central to those conversations,” Arnie Sowell Jr., Executive Director of NextGen Policy. “Clearly, a strengthened Cap-and-Trade program would help address California’s affordability concerns by investing in California’s most vulnerable communities; create new technologies and job opportunities; and contribute to economic expansion across our state. The way I see it, a stronger Cap-and-Trade program leads to a much stronger California for all.”

"Done right, we know that cap-and-trade funded programs can generate local jobs, cost savings, and economic opportunities for the communities that most need them,”said Lolly Lim, Climate Equity Program Manager at The Greenlining Institute. “The next phase of California’s cap-and-trade must truly center these elements, ensuring tangible impacts on affordability and economic opportunities.”

Cap-and-trade requires the state’s major polluters — such as oil refineries, power plants, industrial facilities, and fuel distributors — to purchase “allowances” for each metric ton of pollution they emit to cover their annual emissions. The amount of emissions allowed under the cap declines over time, requiring the regulated entities to cut their emissions. Because the cap limits pollution that goes into the atmosphere, it provides the greatest possible assurance that emissions will decline in line with California’s climate goals.

"This report provides a strong foundation for state leaders to think big when extending Cap-and-Trade to ensure Californians get the most this program has to offer," said Daniel Barad, Western States Senior Policy Manager at Union of Concerned Scientists. "Immense economic benefits await California from renewable energy, clean transportation, air quality, and conservation investments supported by Cap-and-Trade. A more robust program will generate more benefits for Californians while helping build a clean, sustainable economy." 

Delaying the extension and ongoing uncertainty about strengthening the program are already costing California essential revenue. In February of 2024 the price of each allowance was $41.76, generating approximately $1.3 billion. In February of 2025 the price was $29.27, generating just under $900 million. This translates into fewer resources available to invest in utility bill credits, renewable energy, public transportation, sustainable housing, conservation, forest fire management, air quality, and more.

Since cap-and-trade began in 2012, California has reduced year-on-year emissions from nearly every sector covered by the program. As of May 2025, the program has invested $11.6 billion of allowance revenues.