California Gov. Gavin Newsom has signed a bill extending the state's cap-and-trade program through 2045

California Gov. Gavin Newsom hosts a press conference and signs a slew of climate initiative bills at the Academy of Sciences, Friday, Sept. 19, 2025, in San Francisco. (AP Photo/Camille Cohen)

SACRAMENTO, Calif. (AP) — California Gov. Gavin Newsom on Friday extended a signature state program aimed at reducing planet-warming emissions through 2045, a move Democrats cheered but Republicans warned would raise gas prices.

The program known as cap and trade sets a declining limit on total greenhouse gas emissions in the state from major polluters. Companies must reduce their emissions, buy allowances from the state or other businesses, or fund projects aimed at offsetting their pollution. Money the state receives from the sales funds climate-change mitigation, affordable housing and transportation projects, as well as utility bill credits for Californians.

It was set to expire after 2030. The law Newsom signed Friday at the Morrison Planetarium in San Francisco potentially boosts carbon-removal projects and requires the program to align with California's target of achieving so-called carbon neutrality by 2045. That means the state will remove as many carbon emissions as it releases. The law changes the name to “cap and invest” to emphasize that the money goes toward other programs.

“We’re doubling down on our best tool to combat Trump’s assaults on clean air – Cap-and-Invest – by making polluters pay for projects that support our most impacted communities,” Newsom, a Democrat, said in a statement.

Newsom also signed a law committing $1 billion in program revenue for the state’s long-delayed high-speed rail project, $800 million for an affordable housing program, $250 million for community air protection programs and $1 billion for the Legislature to decide on annually.

He approved other measures aimed at advancing the state’s energy transition and lowering costs for Californians. They include laws to speed up permitting for oil production in Kern County, refill a fund that covers the cost of wildfire damage when utility equipment sparks a blaze and allow the state’s grid operator to partner with a regional group to manage power markets in western states.

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California Gov. Gavin Newsom hosts a press conference and signs a slew of climate initiative bills at the Academy of Sciences, Friday, Sept. 19, 2025, in San Francisco. (AP Photo/Camille Cohen)

Newsom also signed a bill that would increase requirements for air monitoring in areas overburdened by pollution and codify a bureau within the Justice Department created in 2018 to protect communities from environmental injustices.

California has some of the highest utility and gas prices in the country. Officials face increased pressure to stabilize the cost and supply of fuel amid the planned closures of two oil refineries that make up roughly 18% of the state’s refining capacity, according to energy regulators.

Environmental justice advocates said the cap-and-trade extension doesn't go far enough to address air pollution impacting low-income Californians and communities of color more likely to live near major polluters. The program's “cap” applies to planet-warming emissions, not other pollutants impacting air quality. Cap and trade doesn't set emissions limits for individual facilities, meaning an industrial polluter could continue to emit the same amount of greenhouse gases over time so long as it has the right amount of credits or offsets.

Other critics of the cap-and-trade extension are worried about it raising costs. The program has increased gas costs by about 26 cents per gallon, according to a February report from the Independent Emissions Market Advisory Committee, a group of experts that analyzes the program. It has played “a very small role” in increasing electricity prices because the state’s grid isn’t very carbon intensive, the report says.

“I said it in June and I’ll say it again: legislative Democrats live in ‘Bizarro World,’" said Republican state Sen. Tony Strickland. “Their idea of tackling affordability is extending the Cap-and-Trade program, a hidden tax that drives up costs on everything from gas to groceries. That’s not climate leadership. I call it economic sabotage.”

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California Gov. Gavin Newsom hosts a press conference and signs a slew of climate initiative bills at the Academy of Sciences, Friday, Sept. 19, 2025, in San Francisco. (AP Photo/Camille Cohen)

But Democratic Assemblymember Jacqui Irwin, who wrote the reauthorization bill, said it will help the state fight climate change because “the cost of inaction is immeasurable.” She referenced the devastating wildfire that ripped through Pacific Palisades in her district in January.

Daniel Barad, the western states acting co-director for the Union of Concerned Scientists, said last week that the extension comes at a key time.

"The most important thing is it extends it to 2045, which was the most critical thing that the state could have done, especially in the face of federal rollbacks and attacks on California's authority to enforce our lifesaving regulations,” he said.

California Gov. Gavin Newsom casts a shadow as he hosts a press conference and signs a slew of climate initiative bills at the Academy of Sciences, Friday, Sept. 19, 2025, in San Francisco. (AP Photo/Camille Cohen)