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Today marks a major development in U.S. climate policy. Gov. Newsom, the CA Assembly & Senate just released the final cap-and-trade—now called cap-and-invest—reauthorization bill: AB 1207. 1/ #climatesky #energysky

Cap-and-invest is California’s centerpiece climate policy. It ensures the state hits its climate targets affordably
 & generates billions in revenue. It is also a pillar 
with other carbon markets for global climate cooperation. 2/

AB 1207 reauthorizes the core of CA’s carbon market and reinforces it in 5 key ways. Here’s what’s new: 3/

1. Extension to 2045
 Past renewals every 10 yrs cause market crashes & uncertainty.
 AB 1207 extends program to 2045.
 A 20 year carbon price signal for clean investment in the world’s 4th-largest economy. 4/

2. Explicit link to CA climate targets
 For the first time, CA carbon market is explicitly tied to CA GHG goals: -40% cut by 2030 (vs 1990) -85% cut (vs 1990) & net-zero by 2045 This means financial consequences if CA fall short 5/

3. Making electricity more affordable 
 Electricity in CA is too costly, slowing electrification and making adaptation expensive. 
 AB 1207 directs more revenue to the CA Climate Credit, boosting bill relief, especially during hot months when families need it most. 6/

4. Smarter offsets
 Offsets lower costs but raise integrity concerns.
 AB 1207 has a new idea: for every offset used, the cap tightens.
 Emissions stay under the cap and compliance costs fall vs. banning offsets outright. 7/

5. Tackling leakage
 Previously, free permits granted regardless of industry’s leakage risk.
 But too many free permits mean less revenue. 
 Now, post-2030 free allocations must consider each sector’s leakage risk. 8/

This is a strong bill. It double downs on CA’s climate commitment for next 20 years—balancing ambition & affordability. It may also well be the most important U.S. climate policy for the foreseeable future. 9/