California’s climate policy goals: words matter

OPINION – As the legislature begins deliberations on cap-and-trade reauthorization, two questions are paramount: Has the cap-and-trade program accomplished its initial goals, and what should be its goals going forward?

In a legislative hearing on this topic held by the Joint Legislative Committee on Climate Change Policy (JLCCCP) on February 26, CARB’s Chair Liane Randolph provided testimony summarizing the accomplishments of the cap-and-trade program to date:

“The most recent [scoping] plan was adopted in 2022, and lays out a cost-effective and technologically feasible plan to achieve the two climate targets in AB 1279: reaching climate neutrality and reducing carbon emissions to 85% below 1990 levels by 2045. … The state achieved our 2020 emission reduction goal four years early, and we are on track to achieve our 2030 goal of reducing greenhouse gas levels by 40% below the 1990 level.” [hearing archive @46:18]

This statement selectively paraphrases the following statutory language (emphasis added):

“The regulations adopted by the state board pursuant to this section shall achieve the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions from those sources or categories of sources, in furtherance of achieving the statewide greenhouse gas emissions limit.” Excerpted from AB 32 (HSC 38560.5(c)).

“It is the policy of the state to … achieve net zero greenhouse gas emissions as soon as possible, but no later than 2045 …” Excerpted from AB 1279 (HSC 38562.2(c)).

CARB appears to ascribe no actionable meaning to the highlighted words “maximum” and “as soon as possible”. It has not made any assertion or representation that its implementation of AB 32 has, to date, achieved the “maximum technologically feasible and cost-effective reductions in greenhouse gas emissions,” or that its AB 1279 implementation plan could “achieve net zero greenhouse gas emissions as soon as possible”.

CARB’s statutory interpretation of emission “limits” as “targets” reflects a dialectical tension between two economic schools of thought: Should regulatory policy seek to achieve predetermined emission targets at the lowest possible cost, or should it seek to achieve the lowest possible emissions within limits of cost affordability? CARB is in the former camp, but there is a significant risk in relying on statutory emission “limits” to set “targets”.

California’s statutory limits are based on IPCC guidance, as noted in CARB’s 2022 Scoping Plan:

“The path forward is informed by robust science. The recent Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) summarizes the latest scientific consensus on climate change. … we are dangerously close to hitting 1.5°C in the near term. To avoid climate catastrophe and remain below 1.5°C with limited or no overshoot of that threshold, global net anthropogenic CO2 emissions need to reach net zero by 2050.”

However, the “latest scientific consensus” cited in the 2022 Scoping Plan is being superseded by recent climate trends and research. As noted in the February 7, 2025 report from Copernicus Climate Change Service,

Compared to the 1850-1900 average, designated as the pre-industrial reference period, January 2025 was 1.75ºC warmer than the average for the month.

January 2025 was the 18th month in a 19-month period with a global-average surface air temperature exceeding 1.5ºC above pre-industrial levels.

Climate projections are still in flux, but it is evident from recent climate trends that California’s policies should have the priority goals of incentivizing the maximum technologically feasible and cost-effective reductions in greenhouse gas emissions and achieving net-zero emissions as soon as possible within limits of practicability.

CARB’s early attainment of its 2020 target demonstrated that it is possible to exceed statutory emission reduction requirements well within limits of cost affordability. This result can be attributed to CARB’s adoption of a cap-and-trade allowance price floor. Over the entire 2014-2020 compliance period, auctioned allowances were selling at or very close to the price floor and the cap-and-trade auction operated effectively as a fixed-price sale of allowances. But there is currently no statutory requirement for a price floor, and CARB’s 15-page overview of cap and trade presented at the February 26 hearing made no mention of the price floor.

Future allowance prices cannot be predicted with any certainty, but we can decide what price we are willing to pay. If the legislature and CARB can find the political will to set a price floor at a level consistent with expected and acceptable allowance prices, this could be a first step beyond status-quo policies that have so far failed to galvanize meaningful global action on climate change.

Ken Johnson is affiliated with the Climate Reality Project: Silicon Valley Chapter (Legislation and Public Policy Committee).