California carbon market faces uncertainty amid policy shifts

California’s cap-and-trade program is undergoing significant transitions as Governor Gavin Newsom moves to link the state’s decade-old carbon market with a new market in Washington state. This linkage aims to complement the existing market shared with Quebec, a move Newsom described as “choosing certainty, partnership, and clean energy.”

However, the program faces challenges. Experts suggest recent adjustments may make California’s climate goals harder to achieve, and the state is struggling to meet its 2030 target of reducing emissions to 40% below 1990 levels. Additionally, public support for specific climate mandates, such as the 2035 ban on new gasoline-powered vehicle sales, has declined as affordability and the cost of living become dominant concerns for residents.

The future of the program remains uncertain heading into the next gubernatorial election. Candidates have expressed differing views, with Steve Hilton proposing to suspend the market entirely, while other potential leaders have not yet detailed their specific plans for the program or California’s broader climate ambitions.