Cap-and-Trade Program

The California Air Resources Board (CARB) has a multi-sectoral cap-and-trade system that requires businesses to purchase allowances equivalent to their emissions, incentivizing mitigation and the uptake of renewable thermal solutions. The program is designed to contribute to the state’s goals to reduce greenhouse gas emissions by 48% below 1990 levels by 2030 and net zero by 2050. The program covers industrial emitters, electricity generation, and fuel distributors that emit more than 25,000 tons of CO2e annually. The Cap-and-Trade Auction Proceeds Fourth Investment Plan, submitted by CARB in 2022, recommends using proceeds from the auctioning of emissions allowances to invest in low-carbon industrial production solutions spanning a wide range of renewable thermal technologies.