Senate Environmental Quality Committee

11 September 2025

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Senate Environmental Quality Committee Wed, 10 Sept 2025 California State Senate

00:09 - 00:41

Speaker 1

No? Okay. Okay. We are officially calling this meeting to order. This is the Environmental Quality Committee, and tonight we will be hearing one bill.

I see that our author is here. Thank you, Assembly Member Irwin, for being here. This is AB twelve oh seven, And following the bill hearing, we will hear three other bills, s b two thirty seven, s b three fifty two, and s b eight forty for informational purposes only. So we do not yet have a quorum, but we will start as a subcommittee. So we would like to invite you to come forward and present AB twelve oh seven.

00:50 - 03:40

Speaker 2

Well, thank you and good evening, Madam Chair and Senators. Today, I'm presenting AB twelve oh seven, which reauthorizes California's cap and trade program, one of the strongest, most cost effective emissions reduction programs in the world. The bill reauthorizes the program through 2045 while making the following changes: It renames cap and trade as the Cap and Invest program to reflect the billions of dollars of program revenue invested in affordable housing, transit infrastructure, clean drinking water, wildfire prevention, clean air grants and numerous other programs. It aligns the Cap and Invest program with California's overall climate strategy to ensure an organized, steady path to achieving our statewide net zero goal by 2045. AB twelve oh seven restructures the California Climate Credit, which reduces all of our constituents' utility bills.

It redirects funds that would have gone to natural gas suppliers to instead increase the electric climate credit and to be distributed to the highest bill months to provide affordability when it is most needed. AB twelve oh seven will also direct a portion of the funds to provide a long term affordability benefit through public financing for transmission projects. CARB will be required to distribute allowances to support the industries at the greatest risk of leaving California, ensuring that more California businesses thrive. The bill maintains the 6% limit on offset usage, providing significant and reliable cost containment. It maintains requirements to ensure offsets provide direct environmental benefits to Californians and places them under the cap, which means that one allowance is removed for every offset used, ensuring that the program pairs compliance flexibility with significant emissions reductions.

The bill increases transparency and accountability for CARB by requiring that the chair appear before the legislature for up to three hearings during the regulatory update process on cap and invest. It requires CARB to prioritize affordability and consumer protections in designing the program, and it requires an economic analysis of regulations to provide to the to be provided to the legislature. Finally, the bill establishes an annual oversight hearing on how the greenhouse gas reduction funds are spent to ensure that these investments are meeting the outcomes that we have promised. That summarizes the changes to this program. Cap and Invest has proven to be both an efficient and an effective way to reduce greenhouse gases, while providing a roadmap for other states and countries to follow suit.

And with that, I would like to introduce my witnesses from the Environmental Defense Fund and the Coalition for Clean Air.

03:42 - 06:14

Speaker 3

Thank you very much. Good evening. I'm Caitlin Rudner Sutter, California Director for Environmental Defense Fund. I'm also the assembly appointee to the Independent Emissions Market Advisory Committee, though speaking on behalf of EDF here today. And I'm very pleased to be here in support of AB twelve oh seven, reauthorizing California's landmark climate policy and renaming it Cap and Invest.

This program is the cornerstone of California's suite of climate policies. It is an essential program to ensure emission reductions and to generate revenue for myriad state priorities, both of which it has done successfully for over a decade. Cap and Invest is also the most cost effective climate policy that the state has. Leaning on this program to continue to deliver emission reductions and revenue to address affordability, climate resilience, and environmental justice is essential and urgent. The bill before you reflects months of work from many policymakers, staff and stakeholders, and I'm grateful for all of those efforts.

This bill is a compromise. No one loves all of it, but it is a good compromise. And it is imperative to pass AB twelve oh seven now to provide certainty of emission reductions, certainty for business investment and certainty for revenue. Crucially, AB twelve oh seven ensures alignment of the emissions cap with California's 2,045 greenhouse gas emission reduction targets and it preserves free allocation of allowances to prevent leakage and contain costs but enables CARB to do so in a way that reflects real economic conditions, not a one size fits all approach. It also enables the transition of allowance allocation from natural gas utilities to electric utilities, which helps to lower electricity costs and support affordable household electrification.

Importantly to EDF, EB-twelve oh seven preserves the Offset Program, which is essential to driving financial support for tribal communities and investments in nature based climate solutions. This bill also includes, though, an important update to the Offset Program, which helps to steadily increase climate ambition and preserve environmental integrity. This balances the concerns about preserving all of the benefits of Offsets while responding to potential environmental concerns. EDF is very pleased to support AB twelve oh seven and we deeply appreciate Assembly Member Irwin and Senator Limon's tireless leadership in establishing the future of this program. Thank you very much.

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