Background & Resources

About California's cap-and-trade program

Through California’s climate program, billions of dollars are collected through a mechanism called cap-and-trade, which requires polluters to pay for the carbon they put into the air. These funds go to the California Climate Investment Program (formerly the Greenhouse Gas Reduction Fund, or GGRF) to be invested in projects and programs that further reduce climate pollution.

Each year, the legislature allocates the funding in the budgeting process, with guidance from the funding plan adopted in the 2014 state budget. Sixty percent of the funds are allocated continuously to Transportation and Sustainable Communities programs, including the Affordable Housing and Sustainable Communities program, the Low Carbon Transit Operations Program, and the Transit and Intercity Rail Capital Program. The other forty percent is decided annually by the legislature.

Dedicated investments to benefit disadvantaged communities

California has dedicated a significant portion of this funding to lifting up Disadvantaged Communities — areas identified by the state as having disproportionately borne the burden of pollution, racism, and disinvestment. The California Environmental Protection Agency (CalEPA) has created a screening methodology — CalEnviroScreen — to identify which communities are defined as Disadvantaged Communities. 

California state law contains fairly rigorous requirements for GGRF revenues to be spent in ways that help low-income households and disadvantaged communities. This includes requirements that at least 25% of all auction proceeds in the cap-and-trade program be spent within disadvantaged communities in ways that benefit its residents, and that at least 5% of proceeds be spent in ways that benefit low-income households or communities throughout the state. This commitment provides a model for climate protection that is rooted in justice and considers improving quality of life as a primary strategy for success.

California's comprehensive climate policies

California’s cap-and-trade program is one part of the state’s bold leadership in climate policy. The California Global Warming Solutions Act of 2006 (AB 32) and the Sustainable Communities and Climate Protection Act of 2008 (SB 375) created ambitious goals for reducing our state’s climate pollution by 2030.

TransForm, through our work to co-found and lead the statewide ClimatePlan network, has helped ensure that California’s regions make and fulfill plans for sustainable, equitable communities that reduce climate pollution from driving and help achieve the goals of AB 32 and SB 375.

Visit the State of California Climate Investments Map for more information on the impact of California’s climate funding programs.

Further resources

For more information on California's climate program, please contact Joshua Stark.