Making Cap-and-Invest Work

Transform helped win a reauthorized Cap-and-Invest Program (formerly Cap-and-Trade) that prioritizes investments in transportation, housing, and environmental justice.

Continuing to ensure Cap-and-Invest meets its promise

In 2025, Transform was part of a coalition that advocated for and won continuous funding for crucial housing, transportation, and environmental justice programs with money raised through the state’s reauthorized Cap-and-Invest (formerly Cap-and-Trade) Program. However, the amount raised through the auction of carbon credits varies from year to year.

While initial revenue was projected above $4 billion — enough to fund high-speed rail, legislators’ annual priorities, and fully fund affordable housing, transportation, and environmental justice programs that are proven to reduce carbon emissions. However, actual proceeds are likely to come in much lower in 2026 and future years, with any shortfall coming out of the programs we care about most. Transform is continuing to monitor Cap-and-Invest rulemaking and auction proceeds to ensure any revenue reductions don’t shortchange our most effective climate programs that serve California’s frontline communities.

Transform’s vision for improving Cap-and-Invest

Transform outlined three central pillars for improving Cap-and-Trade. Over 50 organizations have signed on to a letter to our elected leaders supporting these pillars.

Invest in affordable housing

Many Californians can’t afford to live close to where they work because of a chronic undersupply of affordable housing. Building dense, infill, affordable housing close to transit and jobs reduces transportation emissions while improving our quality of life.

Support public transit

Transportation is the number one source of carbon emissions in California. The next iteration of California’s Cap-and-Invest Program must continue to invest in public transit and include more flexibility to help address the transit fiscal cliff, ensuring this vital public good becomes a reliable, sustainable mobility option for more Californians.

Invest in frontline communities

Communities on the frontlines of climate pollution have seen very few greenhouse gas emission reductions or air quality improvements from the current version of Cap-and-Trade, and programs that advance environmental justice are underinvested in. Tightening the program by removing free allowances and dubious offsets will reduce climate and health pollution and increase the Greenhouse Gas Reduction Fund, adding revenue to support existing and additional expenditures that prioritize frontline communities.

Cap-and-Trade Resources

Coalition Letter

March 1, 2025

Transform led a coalition of 50 environmental, transportation, housing, and social justice groups to outline a platform for reforming California’s Cap-and-Trade Program.

Read the letter >