California's Greenhouse Gas Cap-and-Trade Program helps achieve the goals of the Global Warming Solutions Act of 2006 (AB 32): fight climate change by reducing California's greenhouse gas pollution to 1990 levels by 2020. Cap-and-Trade was designed by the California Air Resources Board (ARB), and it creates powerfrul 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.
How Cap-and-Trade Works
To slow down climate change we have to 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.
Funds to Protect Customers and Slow Climate Change
Power plants and other large industrial facilities must now 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 households and businesses as the Climate Credit.
California Climate Credit
The California Climate Credit is your share of these funds. It is a payment to Calfornians from State programs to fight climate change. This credit protects Californians from the costs of carbon pollution in electricity that comes from non-renewable resources, like coal and natural gas. It also gives people an extra opportunity to invest their credit in ways to save energy and reduce their energy costs.
Join the Fight Against Climate Change
You can use these savings however you want, but you can also join with 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.
Who is Eligible for the Climate Credit and How Much Will It Be?
Households and eligible small business will receive these funds as a California Climate Credit directly on their electricity bills. The Climate Credit will show up on your electricity bills as a credit to your balance.
- Households will receive the credit on April and October electricity bills;
- Small Businesses will receive the credit monthly on electricity bills;
- At-risk Industrial Facilities will receive a credit once a year.
Learn about the Climate Credit, and find answers to Frequently Asked Questions.
Impact on Electric Utilties
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 from the State (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 customer's 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.
The CPUC plays several important roles to implement parts of Cap-and-Trade: we oversee how electric and natural gas utilities comply with ARB's greenhouse gas emissions requirements; and we also make decisions about how to use some of the funds generated from carbon pollution payments that utilities and industries make to the state. To learn more and to participate in our decision-making process, read about our relevant proceedings.
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:
for information about how Cap-and-Trade will affect you as a household or small business, read about the California Climate Credit.
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