Report on the Proposed Extension of California’s Cap-and-Trade Program and its Alignment with Sustainable Development Goals

California is currently engaged in urgent, high-stakes negotiations to extend its primary climate regulation, the cap-and-trade program, through 2045. This legislative effort is central to the state’s strategy for achieving SDG 13: Climate Action. However, the process and proposed terms have generated significant controversy, highlighting conflicts with other key Sustainable Development Goals, including those related to economic growth, inequality, and institutional integrity.

Policy Background and Linkage to SDG 13 (Climate Action)

The cap-and-trade program is a market-based mechanism designed to lower greenhouse gas emissions. Proponents of a swift extension argue that market certainty is crucial for the program’s continued success. Revenue generated from the program is a critical funding source for projects that advance multiple SDGs.

• Program Objective: To reduce statewide greenhouse gas emissions in line with California’s climate targets, directly supporting SDG 13.
• Financial Impact: Over the past decade, the program has generated nearly $13 billion.
• SDG Alignment of Investments: These funds have been allocated to initiatives that promote:
  • SDG 7 (Affordable and Clean Energy): Funding for clean energy projects.
  • SDG 11 (Sustainable Cities and Communities): Investments in public transit and electric vehicles.

Stakeholder Divisions and Challenges to Sustainable Development

The negotiations are characterized by a lack of transparency and significant opposition from a diverse coalition of stakeholders, including industry, business groups, and trade unions. This conflict underscores the challenges in achieving SDG 17 (Partnerships for the Goals) and raises questions about institutional processes.

Economic Concerns and SDG 8 (Decent Work and Economic Growth)

A primary source of opposition stems from concerns that a hastily approved extension will negatively impact California’s economy and workforce, undermining progress toward SDG 8.

1. Job Security: Opponents, including the State Building and Construction Trades Council, warn of “massive industrial job losses” in sectors like manufacturing, cement production, and energy.
2. Affordability: Business groups and unions argue the policy will lead to “skyrocketing fuel and retail costs,” disproportionately affecting California families and compromising economic stability.
3. Industry Competitiveness: The California Chamber of Commerce and other business advocates express concern that increased costs will push industries out of the state.

Environmental Justice and SDG 10 (Reduced Inequalities)

A fundamental critique of the existing cap-and-trade program is its failure to address localized pollution, which directly conflicts with the objective of SDG 10 by perpetuating environmental inequities.

• Disproportionate Impact: Environmental justice advocates have long criticized the program for allowing major polluters, such as refineries, to continue operating in low-income and minority communities without reducing on-site emissions.
• Market Mechanisms vs. Local Health: The ability for companies to purchase credits and offsets means that greenhouse gas reductions are not guaranteed to occur within the fenceline communities that bear the greatest pollution burden, failing to improve local air quality and public health outcomes as envisioned by SDG 11.

Governance and SDG 16 (Peace, Justice and Strong Institutions)

The legislative process itself has drawn widespread criticism for its opacity, challenging the principles of transparent and accountable governance central to SDG 16.

• Lack of Transparency: Negotiations have occurred primarily behind closed doors, with no formal bill text released to the public or many stakeholders.
• Restricted Access to Information: Reports indicate that Senate leadership has severely limited access to the proposed legislative text, even for other members, prohibiting them from retaining copies for review.
• Calls for Due Process: Opponents argue that rushing a policy of this magnitude in the final days of the legislative session is an inappropriate approach for determining 20 years of climate and economic policy.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 13: Climate Action: The entire article revolves around California’s “cap-and-trade climate program,” a key policy instrument designed to achieve “greenhouse gas reduction.” The debate about extending this program through 2045 is a direct engagement with climate action strategies.
• SDG 10: Reduced Inequalities: The article highlights the disproportionate impact of the policy on certain communities. It notes that environmental justice advocates criticize the program because industrial pollution sources “are often located in low-income and minority communities” and the policy allows large polluters to “continue operating in low-income neighborhoods without improving air quality.”
• SDG 8: Decent Work and Economic Growth: The economic consequences of the climate policy are a central point of contention. Opponents, including trade unions, argue that the program could lead to “massive industrial job losses” and push industries “out of California,” affecting economic growth and employment.
• SDG 7: Affordable and Clean Energy: The article mentions that revenues from the cap-and-trade auctions are used to fund projects including “clean energy,” directly contributing to the goal of promoting renewable and clean energy sources.
• SDG 11: Sustainable Cities and Communities: The use of program revenues to pay for “electric vehicles” and “public transit” directly supports the development of sustainable transportation in cities. Furthermore, the criticism regarding the program’s failure to improve “air quality” in certain neighborhoods relates to the goal of reducing the adverse environmental impact of cities.
• SDG 9: Industry, Innovation, and Infrastructure: The debate touches on the program’s impact on industries such as “cement production to oil and gas and manufacturing.” The policy is intended to drive these industries toward cleaner processes, which aligns with the goal of retrofitting industries to make them more sustainable.
• SDG 3: Good Health and Well-being: The article implies a connection to health by discussing the failure to “reduce pollution at refineries and other industrial sources.” Poor air quality and industrial pollution are significant contributors to health problems, especially in communities located near these facilities.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 13.2 (Integrate climate change measures into national policies, strategies and planning): The article focuses on California’s effort to “extend the state’s landmark greenhouse gas reduction program,” which is a clear example of integrating climate change measures into sub-national policy and long-term planning.
2. Target 10.3 (Ensure equal opportunity and reduce inequalities of outcome): The criticism from “environmental justice advocates” that the program fails to reduce pollution in “low-income and minority communities” directly addresses the need to ensure that climate policies do not exacerbate existing inequalities of outcome, particularly concerning environmental and health impacts.
3. Target 8.2 (Achieve higher levels of economic productivity through … technological upgrading and innovation): The cap-and-trade program is designed to incentivize industries to innovate and adopt cleaner technologies. However, the opposition’s fear of “job losses” and industries moving “out of California” highlights the challenge of achieving this target without negative economic disruption.
4. Target 7.2 (Increase substantially the share of renewable energy in the global energy mix): The article states that program revenue is used to fund “clean energy” projects, which directly contributes to increasing the share of renewable energy.
5. Target 11.2 (Provide access to safe, affordable, accessible and sustainable transport systems for all): The investment of cap-and-trade funds into “electric vehicles” and “public transit” is a direct action toward achieving this target.
6. Target 11.6 (Reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality): The debate over whether the program successfully improves “air quality” in polluted neighborhoods is directly related to this target.
7. Target 3.9 (Substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination): The concern that the program allows companies to “continue operating in low-income neighborhoods without improving air quality” implies a failure to make progress on this target for those specific communities.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Greenhouse Gas Emissions Levels: The primary goal of the program is “greenhouse gas reduction.” Therefore, the amount of greenhouse gases emitted by California’s industries is the core indicator for SDG 13.
• Financial Investment in Climate Projects: The article explicitly states that “almost $13 billion from cap-and-trade auctions has paid for electric vehicles, public transit, clean energy and other projects.” This monetary value serves as a direct indicator of financial flows towards climate adaptation and mitigation activities (relevant to SDGs 7, 11, and 13).
• Local Air Pollution Levels: The article implies the importance of this indicator by highlighting the criticism that the program fails to “reduce pollution at refineries and other industrial sources” or “improve air quality” in specific communities. Measuring pollutants like particulate matter or ozone in these neighborhoods would be a key indicator for SDGs 3, 10, and 11.
• Employment Figures in Affected Industries: The concern raised by unions about “massive industrial job losses” suggests that the number of jobs in sectors like manufacturing and oil and gas is a critical indicator for measuring the socio-economic impact of the policy (relevant to SDG 8).
• Consumer Costs: The argument that the policy could lead to “skyrocketing fuel and retail costs” implies that consumer price indices for energy and goods would be used as an indicator to measure the policy’s impact on affordability for households (relevant to SDG 8).

4. Table of SDGs, Targets, and Indicators

Source: calmatters.org