Cap & Invest

How it works

A proven Cap & Invest model

Cap & Invest is the most efficient way to cut emissions and support the economy at the same time. The Climate Commitment Act is based on a successful model that is already working for other states, regions and nations. Their experiences help us design the CCA to be successful. Let’s take a closer look at how it’ll work.

The Cap

A limit, or cap, on carbon emissions is set that goes into effect in 2023.  The CCA’s cap will cover about 100 entities, currently accounting for around 75 percent of statewide emissions, through 2050.  These entities include stationary emitters, like heat-intensive industries and large fuel consumers, as well as fuel suppliers.

The cap decreases over time to meet state emission goals, which are a 45 percent reduction by 2030 and net-zero by 2050. So businesses must either find new ways to emit less and save money, or buy carbon allowances from the state (more on that in the next section).

Auction

Auctions are the primary compliance mechanism of CCA. If companies can’t meet the cap, they can buy additional permits from the state, exchange with others who have allowances to spare or offset their emissions. Offsets, however, are only eligible for a small portion of allowances in the CCA. Our goal is fewer emissions overall, not simply offsetting them.

The credit auctions have both a floor and ceiling price. The floor ensures predictable cash for investments. The ceiling insulates from price shocks – protecting businesses & jobs. CCA’s auction will raise billions of dollars through 2030 and beyond. 

Investments

This auction revenue is invested in climate priorities, like clean air, electrified transportation, energy efficiency and wildfire prevention— all with an emphasis on local jobs. Money earned by setting the cap is invested in projects that also lower emissions. So, two forces push down emissions simultaneously. 

To formalize spending priorities, the CCA sets up an Environmental Justice & Equity Advisory Panel. This panel provides investment assessments and recommendations, centering the needs of overburdened communities. 

Waste & Emissions Reductions

In addition to stimulating the economy, these investments also result in lower emissions, lower operating costs and help tackle priorities like reduced congestion, cleaner air and other public health benefits.

Our streamlined, low waste economy will make our companies more competitive nationally and globally. By engaging the broad economy, we also broaden the opportunity for innovation. Even exempt sectors can join in the emission reduction cycle.

It’s not just a one-time win. The CCA builds a better system. And if we pass it now, we can cut our state’s emissions by at least 20 million metric tons in the next decade. That’s like taking every car in our state off the road.