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

Executive Summary

The State of California is considering a proposal by Governor Gavin Newsom to extend its cap-and-trade climate program through 2045. This initiative is central to achieving SDG 13 (Climate Action) by continuing to place a cap on greenhouse gas emissions from major polluters. However, the proposed allocation of funds from the program has generated significant debate regarding its alignment with other Sustainable Development Goals. A plan to earmark over half of the projected annual revenue for the state’s high-speed rail project and wildfire management services raises concerns about underfunding other critical programs that support SDG 11 (Sustainable Cities and Communities), SDG 10 (Reduced Inequalities), and SDG 7 (Affordable and Clean Energy). This report analyzes the proposal’s components, stakeholder reactions, and its multifaceted implications for California’s sustainable development agenda.

Proposal to Extend and Restructure Climate Funding

The governor’s proposal seeks to extend the cap-and-trade program, set to expire in 2030, for an additional 15 years. The program, which has generated nearly $13 billion over the past decade for climate-related projects, would be renamed “cap and invest.”

Primary Funding Allocations and SDG Linkages

The proposed budget for the 2025-26 fiscal year would allocate a significant portion of the projected $4.8 billion in cap-and-trade revenue to two major areas:

• Wildfire Management (SDG 15: Life on Land & SDG 13: Climate Action): A commitment of $1.54 billion to fund Cal Fire’s fire prevention and control activities. This allocation addresses the increasing severity of wildfires, a direct consequence of climate change, and aims to protect terrestrial ecosystems and communities.
• Sustainable Infrastructure (SDG 9: Industry, Innovation and Infrastructure & SDG 11: Sustainable Cities and Communities): An earmark of at least $1 billion annually through 2045 for the California high-speed rail project. This investment supports the development of sustainable, low-carbon public transportation infrastructure intended to connect major urban centers.

Stakeholder Analysis and Conflicts Among Sustainable Development Goals

The proposed funding structure has drawn criticism from legislators, policy analysts, and advocacy groups who argue it creates a conflict between long-term infrastructure goals and immediate community needs, potentially undermining progress on several SDGs.

Concerns Regarding Reduced Inequalities and Community Well-being (SDG 10 & SDG 11)

A primary point of contention is the potential neglect of programs directly benefiting disadvantaged communities. Critics, including a coalition of environmental justice groups, assert that the focus on high-speed rail and Cal Fire leaves insufficient resources for initiatives crucial to achieving equity and sustainability at the local level. These include:

• Projects to mitigate extreme heat impacts.
• Development of affordable housing.
• Ensuring access to clean drinking water (SDG 6: Clean Water and Sanitation).
• Programs to clean contaminated air, water, and soil that directly threaten public health in low-income communities of color.

Advocates argue that the current cap-and-trade structure has already failed to adequately reduce local pollution in these communities, as it allows polluters to buy credits rather than cut on-site emissions. This perpetuates health inequities, a direct challenge to SDG 10.

Impact on Sustainable Transport and Energy Transition (SDG 7 & SDG 11)

Legislators and organizations like the California Transit Association have expressed concern that the plan diverts necessary funds from other sustainable transport priorities. Key issues include:

1. Decarbonization of Transportation: Assemblymember Lori Wilson noted that transportation is the largest source of emissions and requires significant investment to decarbonize, particularly through the transition to electric vehicles.
2. Public Transit Funding: The plan is viewed as “silent on the importance of continued climate investment” in mass transit services, which are essential for improving air quality and addressing affordability for everyday Californians.

Economic Affordability and Institutional Governance (SDG 1, SDG 8 & SDG 16)

The debate is set against a backdrop of concerns over affordability and institutional transparency.

• Household Costs (SDG 1: No Poverty): A report from the Legislative Analyst’s Office highlighted that the program could increase gasoline prices, potentially adding a significant financial burden of approximately $700 per year to the average household, disproportionately affecting low-income families.
• Legislative Process (SDG 16: Peace, Justice and Strong Institutions): The governor’s strategy of linking the program’s reauthorization to the state budget bill has been criticized for reducing legislative oversight and public input on a landmark climate policy. Assemblymember Cottie Petrie-Norris described the move as “insane” given the state’s challenging budget situation.
• Programmatic Flaws: The proposal maintains controversial provisions, such as free emission permits for the oil and gas industry and the use of carbon offsets, whose effectiveness has been questioned. These elements raise concerns about the program’s ability to drive genuine economic transformation in line with SDG 8 (Decent Work and Economic Growth).

Conclusion: Balancing Competing SDG Priorities

The proposal to extend California’s cap-and-trade program represents a critical juncture for the state’s climate policy. While it reaffirms a commitment to SDG 13 (Climate Action), the debate over its funding allocations reveals deep tensions between large-scale infrastructure projects (SDG 9) and community-level environmental justice and equity goals (SDG 10, SDG 11). The legislative process will require a careful balancing of these competing priorities to ensure that California’s primary climate financing mechanism promotes a future that is not only low-carbon but also equitable, affordable, and sustainable for all its communities.

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

  This is the central theme of the article. The entire piece revolves around California’s “cap and trade program,” a key policy instrument designed to “reduce greenhouse gases and adapt to climate change.” The article discusses funding for climate mitigation (reducing emissions) and adaptation (combating extreme wildfires).

• SDG 11: Sustainable Cities and Communities

  The article extensively discusses investments in urban and inter-city infrastructure aimed at sustainability. This includes funding for “public transit,” “electric vehicles,” and the “California high-speed rail project.” It also addresses urban environmental quality, citing concerns about “contaminated air, water and soil” and the need for “affordable housing” in disadvantaged communities.

• SDG 9: Industry, Innovation, and Infrastructure

  The development of the “California high-speed rail project” is a major focus, representing a significant investment in sustainable infrastructure. The article details the project’s funding, challenges (“construction delays, cost overruns”), and its role in connecting major cities, which aligns with building resilient and sustainable infrastructure.

• SDG 7: Affordable and Clean Energy

  The article states that part of the nearly “$13 billion from cap and trade auctions has already been spent on… clean energy,” directly linking the state’s climate fund to the promotion of clean energy sources.

• SDG 15: Life on Land

  The article highlights the impact of climate change on terrestrial ecosystems, specifically through more extreme wildfires. The proposal to commit “$1.54 billion” to “Cal Fire’s ‘fire prevention, fire control, and resource management activities'” directly addresses the goal of protecting and restoring terrestrial ecosystems.

• SDG 10: Reduced Inequalities

  The article raises significant concerns about environmental justice and equity. It notes that advocacy groups criticize the program for “failing to reduce local pollution” in “disadvantaged communities” and that these communities “bear the disproportionate burden of some of the worst air quality in the state.” The debate over affordability, such as potential increases in gasoline prices for households, also relates to this goal.

• SDG 3: Good Health and Well-being

  The article links environmental conditions to public health. Environmental justice groups are quoted raising concerns about “contaminated air, water and soil that pose direct threats to public health,” especially in low-income neighborhoods.

• SDG 6: Clean Water and Sanitation

  The article explicitly mentions that critics of the proposed budget allocation are concerned it leaves “inadequate money for… clean drinking water,” identifying this as a critical environmental program.

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

1. Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.

   This target is addressed by the proposal to allocate “$1.54 billion of the 2025-26 climate funds… to pay for Cal Fire’s ‘fire prevention, fire control, and resource management activities'” in response to wildfires that “have grown more extreme because of climate change.”

2. Target 13.2: Integrate climate change measures into national policies, strategies and planning.

   California’s cap-and-trade program, created under the “2006 Global Warming Solutions Act,” is a primary example of integrating climate change measures into state-level policy and planning. The governor’s proposal to “extend California’s cap-and-trade program… through 2045” is a direct effort to continue this integration.

3. Target 11.2: By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all.

   This target is central to the debate over funding. The article details investments in the “California high-speed rail project,” “electric vehicles,” and “public transit” as key uses of the climate fund, all aimed at creating sustainable transport systems.

4. Target 11.6: By 2030, reduce the adverse per capita environmental impact of cities, including by paying special attention to air quality and municipal and other waste management.

   This is addressed through the criticism from environmental justice advocates that the cap-and-trade program has failed “to reduce local pollution in those communities” and does not adequately clean up “contaminated air, water and soil.”

5. Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure… to support economic development and human well-being.

   The “California high-speed rail project,” which aims to “connect Los Angeles to San Francisco,” is a direct example of developing large-scale sustainable infrastructure, despite being “beset with construction delays, cost overruns and fights about the route.”

6. Target 3.9: By 2030, substantially reduce the number of deaths and illnesses from hazardous chemicals and air, water and soil pollution and contamination.

   The concern that current policies allow polluters to “continue operating in low-income neighborhoods without reducing emissions there” and the call for funds to “clean up contaminated air, water and soil that pose direct threats to public health” directly relate to this target.

7. Target 15.2: By 2020, promote the implementation of sustainable management of all types of forests, halt deforestation, restore degraded forests and substantially increase afforestation and reforestation globally.

   Funding for Cal Fire’s “resource management activities” and “fire prevention” efforts is a form of sustainable forest management aimed at mitigating the risk of extreme wildfires, which degrade forest ecosystems.

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

Yes, the article contains several quantitative and qualitative indicators that can be used to measure progress.

• Financial Investment as an Indicator: The article is replete with financial figures that serve as direct indicators of investment towards specific targets.
  • For Target 13.1 (Climate Adaptation): “$1.54 billion” proposed for Cal Fire’s firefighting and prevention activities.
  • For Targets 11.2 & 9.1 (Sustainable Transport/Infrastructure): “$1 billion a year” earmarked for the high-speed rail project, with “more than $7 billion over the past decade” already spent.
  • For overall climate investment (Target 13.2): “almost $13 billion from cap and trade auctions has already been spent” on various projects, with a “projected $4.8 billion” available in the next fiscal year.
  • For Target 10.2 (Reducing Inequalities): “nearly $9.2 billion has been invested in projects that benefit disadvantaged communities.”
• Policy Implementation as an Indicator: The existence and extension of the cap-and-trade program itself is an indicator of progress on Target 13.2. The article notes the plan is to “extend California’s cap-and-trade program… through 2045.”
• Greenhouse Gas Emissions as an Indicator (Implied): The primary goal of the cap-and-trade program is “slashing greenhouse gas emissions.” While the article doesn’t provide specific emission reduction figures, the level of emissions is the ultimate indicator of the program’s success.
• Household Costs as an Indicator: The article mentions a report from the Legislative Analyst’s Office that provides a specific metric for the program’s impact on affordability (related to SDG 10). The program could “add 74 cents to the cost of gasoline,” costing the “average California household… an additional $700 a year.” This serves as an indicator of the socio-economic impact on citizens.
• Air Quality as an Indicator (Implied): The criticism that the program fails to “reduce local pollution” and improve “air quality” in disadvantaged communities implies that local air pollution levels are a key indicator for measuring progress on Targets 11.6 and 3.9.

4. Table of SDGs, Targets, and Indicators

Source: calmatters.org