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Public Utilities Commission 505 Van Ness Avenue San Francisco, CA 94102

Cap-and-Trade Program

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Greenhouse Gas Cap-and-Trade Program

California's Greenhouse Gas Cap-and-Trade Program helps to fight climate change by reducing California's greenhouse gas pollution. Cap-and-Trade was designed by the California Air Resources Board (ARB) to achieve the goals of the Global Warming Solutions Act of 2006 (AB 32).It creates powerful incentives for our utilities and industries throughout the state to reduce their greenhouse gas emissions, improve the efficiency of their operations, and move toward cleaner forms of energy.

Cap-and-Trade Overview

To slow climate change we must steadily decrease the amount of greenhouse gases we release into the atmosphere each year. One way to do this is to limit the total amount of greenhouse gases that can be emitted in California, and then to lower that limit each year. ARB has done just that: it set a statewide carbon pollution cap, and each year it will lower the cap by about three percent until California reaches its emissions reduction goal.

Find out more about the Cap-and-Trade Program on ARB’s website.

CPUC's Role

As regulators of the state’s electric and natural gas utilities, the CPUC plays several important roles to implement parts of Cap-and-Trade. The utilities are major participants in the Cap-and-Trade Program, and we oversee how they comply with ARB's greenhouse gas emissions requirements. We decide how to use some of the proceeds generated from program to benefit utility customers. We also ensure that the Cap-and-Trade-related costs utilities include in electric and natural gas rates are fair and reasonable.

To learn more and to participate in our decision-making process, read about our relevant proceedings.

California Climate Credit and Funds to Protect Customers

Power plants, natural gas utilities, and other large industrial facilities must pay when they put carbon pollution into the air. Some of that money is used by the state to fight climate change, and some goes to customers.

You can use these funds to join California in its efforts to fight climate change and clean the air! To learn how to make your home or business energy efficient and climate friendly, visit Energy Upgrade California.

For electric customers:

  • Residential California Climate Credit. Households receive a Climate Credit each April and October. Learn how much your Climate Credit will be, and find answers to Frequently Asked Questions.
  • Small Business California Climate Credit. Small businesses receive a monthly bill credit.
  • CA Industry Assistance. At-risk industrial facilities will receive a bill credit once per year. Learn more about CA Industry Assistance.

For natural gas customers:

  • The CPUC is currently working with stakeholders to determine the best way to use proceeds from the Cap-and-Trade program to benefit natural gas customers. The relevant proceedings page contains additional information about this process.

Impact on Electric Utilities

Cap-and-Trade encourages electricity providers to shift toward clean sources of energy - the kind that comes from wind, solar, geothermal and other renewable resources. Under California law, electricity companies that import or supply electricity from non-renewable sources must purchase permits (known as “allowances") for the carbon pollution that comes from burning coal or natural gas to make this electricity. This gives the electricity industry incentive to find the cheapest and cleanest way to provide electricity to customers.

When utilities buy electricity from power plants that emit greenhouse gases, these pollution costs are reflected in all customers’ electricity generation rates - the portion of electricity bills that represents the costs to generate electricity. The California Climate Credit is intended to help protect households and eligible small businesses from these costs.

Other CPUC Programs that Address Climate Change

Cap-and-Trade is only one piece of California's work to address climate change. For instance, at the CPUC:

Links to More Information


Last Modified: 7/29/2015

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