THE NET-ZERO BLOG
Climate policy analysis and updates from Sacramento
Op-ed: How current programs can inform future cap-and-trade investments
NZC’s Sam Uden published an op-ed in Capitol Weekly which examines the Governor Newsom’s proposal to extend California’s cap-and-trade program to 2045. The piece highlights the cost-ineffectiveness of Greenhouse Gas Reduction Fund spending and misalignment with key state climate strategies. The op-ed introduces an ‘Affordable Net-Zero’ investment framework that would shift these investments to support California’s climate and affordability goals.
Analyzing the Governor’s proposed climate actions in the May Revise budget
Yesterday, Governor Newsom released the May Revision to the 2025-26 State Budget, totaling $322 billion in proposed expenditures and including multiple key climate actions. In this short article, we analyze the degree to which these actions could support the state’s climate and energy affordability goals.
A clean energy infrastructure plan for the GGRF
There is evidence that California’s Greenhouse Gas Reduction Fund investments are underperforming with multiple programs requiring thousands of dollars to reduce one ton of carbon emissions. Identifying opportunities for leverage - where $1 of public investment can generate a 3x, 4x, 5x or more improvement on key priorities such as residential rate reductions, clean energy deployment, climate resilience, and similar - could significantly improve the overall performance of the portfolio. This blog highlights one such opportunity: dedicating a portion of annual GGRF revenues into a revolving clean energy infrastructure fund. By targeting investments at high priority infrastructure, such as transmission, the fund can have the catalytic effect of unlocking gigawatts of new clean generation at low-cost.
Strengths and limitations of California's cap-and-trade program
California’s Cap-and-Trade Program has been the subject of discussion in recent weeks as the Legislature considers options for reauthorizing the program, which is currently set to expire in 2030. In this blog, we examine the strengths and limitations of cap-and-trade as a climate policy. We find that while the program can generate low-cost emissions reductions it is markedly insufficient for delivering a statewide net-zero transition in only two decades. The result is that how cap-and-trade auction proceeds are spent becomes extremely important. Strategic investments in infrastructure, technology and resilience could address the limitations of cap-and-trade and support the state’s climate goals.
Aligning GGRF with the 2022 Scoping Plan
California’s Greenhouse Gas Reduction Fund (GGRF) generates roughly $4 billion annually for appropriation by the Legislature to support the state’s climate goals. However, a majority of these investments were set and have been unchanged since 2014. As policymakers consider cap-and-trade reauthorization it makes sense to review current GGRF allocations in light of the latest available science. In this blog we evaluate the alignment between current GGRF allocations and the 2022 Scoping Plan. We find there is a significant mismatch – including that arguably none of the continuous appropriations (65%) are priority investments for the state’s climate goals.
Data analysis of cap-and-trade program investments
California’s cap-and-trade program generates roughly $7-8 billion per year, of which $2-3 billion is rebated to electricity customers in the form of the California Climate Credit while $4-5 billion is deposited into the state’s Greenhouse Gas Reduction Fund to support the state’s climate goals. As legislators contemplate cap-and-trade reauthorization, we analyze the latest program investment data (May 2024).