{"id":19356,"date":"2025-07-01T07:05:49","date_gmt":"2025-07-01T14:05:49","guid":{"rendered":"https:\/\/calcanstaging.kinsta.cloud\/?p=19356"},"modified":"2026-02-25T10:01:00","modified_gmt":"2026-02-25T18:01:00","slug":"cap-and-trade-reform-farmers-vs-fossil-fuel","status":"publish","type":"post","link":"https:\/\/calclimateag.org\/es\/cap-and-trade-reform-farmers-vs-fossil-fuel\/","title":{"rendered":"Broad Coalition Calls for Prioritizing Families and Farmers, Not Fossil Fuel Companies, in Cap-and-Trade Reauthorization"},"content":{"rendered":"

A coalition of over 40 agricultural, climate, and environmental justice groups \u2013 including CalCAN and our member organizations Community Alliance with Family Farmers and California Certified Organic Farmers \u2013 held a lobby day in Sacramento last week to call for <\/span>reforms<\/span><\/a> to the state\u2019s Cap-and-Trade Program to redirect oil subsidies to funding <\/span>tangible benefits<\/span><\/a> for California families and farmers.<\/span><\/p>\n

In meetings with 23 legislative offices, advocates shared examples of how their communities are increasingly bearing the costs of wildfires, droughts, floods, and heat waves, and asked legislators to prioritize affordability for families and farmers, not multinational fossil fuel companies, in their deliberations over the Cap-and-Trade Program.<\/span><\/p>\n

Rising Climate Costs Harm Farmers, Families, and Food Security<\/span><\/h2>\n

Increasingly frequent and catastrophic wildfires have increased <\/span>Pacific Gas & Electric\u2019s electricity rates over 20%<\/span><\/a> since 2018 after adjusting for inflation, have increased <\/span>homeowner insurance premiums by 17%<\/span><\/a> this year, and have caused an estimated <\/span>$250 billion in damage<\/span><\/a> so far in 2025. In addition to paying higher energy bills and insurance premiums, farmers bear the costs of these wildfires in the <\/span>loss of livestock<\/span><\/a>, <\/span>evacuations<\/span><\/a> and disruptions to daily operations, and damage to crops. Smoke taint alone is estimated to have <\/span>caused $3.7 billion in losses<\/span><\/a> to the California wine industry after the 2020 wildfires.<\/span><\/p>\n

Droughts, which are also becoming more severe as a result of climate change, cost the California agricultural economy billions of dollars and thousands of lost jobs. For example, the 2021 drought caused crop revenue losses and increased pumping costs of <\/span>approximately $1.1 billion<\/span><\/a>, with roughly 8,700 full- and part-time jobs lost. And in more recent years, <\/span>floods have washed away farms<\/span><\/a>, <\/span>heat waves have decimated crop yields<\/span><\/a>, and longer growing seasons have <\/span>increased pest pressures<\/span><\/a>. These impacts have, in turn, <\/span>increased the cost of food<\/span><\/a> for all families.<\/span><\/p>\n

Cap-and-Trade Program is Supposed to Help, But Needs Reforms<\/span><\/h2>\n

The state\u2019s Cap-and-Trade Program was intended to help California farmers and families address these rising costs by: 1) requiring polluting industries that are the root cause of climate costs to pay for their emissions by purchasing \u201callowances\u201d to incentivize them to reduce their emissions; and 2) using the resulting revenue to support California in transitioning to a near-zero emissions economy and to support California communities that have been harmed by the fossil fuel industry and climate impacts.<\/span><\/p>\n

The current Cap-and-Trade Program has made some progress on those intentions, including by investing over $1.5 billion from the Greenhouse Gas Reduction Fund (GGRF) in programs to support farmers in replacing outdated diesel-powered equipment, electrifying and solar-powering irrigation pumps, and reducing reliance on fossil fuel-based synthetic fertilizers (see pie chart below).<\/span><\/p>\n

\"\"<\/p>\n

<\/h2>\n

 <\/p>\n

But the Cap-and-Trade Program is falling short of its goals in two ways, which the coalition called on the legislature to fix.<\/b><\/em><\/h2>\n

 <\/p>\n

1) Eliminate the Nearly $1 Billion Annual Subsidy to the Fossil Fuel Industry<\/strong><\/h3>\n

During the 2017 reauthorization of the Cap-and-Trade Program, the fossil fuel industry successfully lobbied the legislature to give them a significant portion of their emissions allowances for free on an annual basis, thus reducing the amount they have to pay the state for their emissions. In 2017, the value of those free allowances was $300 million, but as the price of allowances has increased in Cap-and-Trade auctions, the value of those annual free allowances has increased to $890 million as of 2024.\u00a0<\/span><\/p>\n

For the past eight years, those free allowances (included in the yellow \u201cindustrial allocation\u201d slice of the pie chart below) have both undermined the incentive for fossil fuel companies to reduce their emissions and decreased the amount of revenue available by hundreds of millions of dollars per year to support California communities in reducing their reliance on fossil fuels and mitigating the impacts of climate change.\u00a0<\/span><\/p>\n

\"\"<\/p>\n

Unlike electric and gas utilities, which are required to pass the value of their free allowances (included in the dark blue \u201cutility allocation\u201d slice of the pie chart above) onto ratepayers in the form of bill credits twice a year, the fossil fuel industry is under no obligation to pass the value of those free allowances onto consumers. Meanwhile, the five largest oil companies that operate in California <\/span>continue to make record profits<\/span><\/a> on the order of tens of billions of dollars per year.<\/span><\/p>\n

In our meetings with legislative offices last week, we heard a number of offices share our concerns with the 2017 reauthorization deal\u2019s indiscriminate handout of free allowances and an interest in \u201crecalibrating\u201d allowance distribution, while stopping short of committing to eliminate free allowances for the oil and gas industry entirely. This suggested to us an opportunity to reduce the annual subsidy to the fossil fuel industry and the need for continued education and advocacy on the issue.\u00a0<\/span><\/p>\n

2) Eliminate Dubious Offsets that Send Approximately $140 Million Annually Out of State<\/strong><\/h3>\n

The Cap-and-Trade Program also allows regulated entities to comply with the Program by purchasing offset credits rather than buying allowances at auction for up to four percent of their emissions. According to the <\/span>Independent Emissions Market Advisory Committee<\/span><\/a> (IEMAC), which was established to provide independent oversight of the state\u2019s Cap-and-Trade Program, \u201cA growing number of academic studies have questioned whether California\u2019s carbon offsets program is achieving its intended climate mitigation objectives…\u201d\u00a0<\/span><\/p>\n

According to a recent <\/span>policy brief<\/span><\/a> from the UC Berkeley Goldman School of Public Policy\u2019s Carbon Trading Project: \u201cCalifornia sends approximately $140 million out of state each year for carbon offsets, most of which have little-to-no actual climate benefit.\u201d<\/span><\/p>\n

Carbon offset mechanisms within Cap-and-Trade have also failed to yield meaningful and widely accessible benefits for California farmers. There are only two agricultural offset protocols \u2014 one for rice production (which no farmers have yet participated in, illustrating the challenges of offset participation) and one for anaerobic dairy digesters. Most California dairies have received little or no benefit from the dairy digester offset protocol, as 85% of dairy digester credits have been generated from projects in 18 states outside California, according to <\/span>CARB\u2019s offset program data<\/span><\/a>.\u00a0<\/span><\/p>\n

In 2012, CalCAN published a <\/span>carbon market policy brief<\/span><\/a> that outlined six principles necessary to ensure the emerging carbon market in California would be transparent, would prioritize health and environmental co-benefits, and would not cause disadvantages to small and mid-sized producers and producers who are early adopters of climate-beneficial practices. None of these principles have been enacted to date, and we believe offsets have been a failed instrument for incentivizing agricultural greenhouse gas emissions reductions.<\/span><\/p>\n

In its <\/span>most recent report<\/span><\/a>, the IEMAC recommended the legislature consider alternatives to offsets, including phasing out offsets and replacing them with projects or credits procured with dedicated GGRF funding:\u00a0<\/span><\/p>\n

\u201cPolicymakers could phase out all or some portion of the current offsets program and replace it with dedicated funding from the Greenhouse Gas Reduction Fund. Potential advantages of this approach include increased revenues for the Greenhouse Gas Reduction Fund, the ability to select target sectors and support state policies like the Natural and Working Lands strategy (rather than let the market choose project outcomes), and the ability to choose projects and programs based on any mix of climate, biodiversity, equity, and geographic preferences policymakers like, including Tribal priorities (rather than letting the market choose project outcomes).\u201d<\/span><\/p><\/blockquote>\n

In our meetings in the Capitol last week, staff in a number of legislative offices acknowledged the critiques of offsets and expressed an interest in learning more about potential alternatives or reforms, which we will continue to push for.<\/span><\/p>\n

Invest in Programs that Benefit California Communities, Families, and Farmers<\/span><\/h2>\n

If both of these reforms were enacted, the state\u2019s Greenhouse Gas Reduction Fund would have over $1.1 billion more per year to invest in <\/span>programs supporting sustainable agriculture, mitigation for extreme heat, and equitable access to clean water, energy, affordable housing, and transportation<\/span><\/a>. In the <\/span>current budget deficit context<\/span><\/a>, this additional revenue could be a critical lifeline for sustaining programs that advance climate solutions that reduce Californians\u2019 cost-of-living and exposure to climate impacts. For agriculture, that could include funding for the Healthy Soils Program, State Water Efficiency and Enhancement Program, Alternative Manure Management Program, Organic Transition Program, and more \u2013 popular programs that have suffered from inconsistent funding.<\/span><\/p>\n

The budget deal announced by the legislature last week deferred final decisions on Cap-and-Trade reforms and GGRF investments in climate programs until later in the summer, which gives our broad coalition a window of at least a few more weeks to educate legislators on the merits of our proposed reforms and investments.<\/span><\/p>\n

If you\u2019re interested in learning more and supporting these efforts, please contact our Policy Director, Brian Shobe, at brian [at] calclimateag.org.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

A coalition of over 40 agricultural, climate, and environmental justice groups \u2013 including CalCAN and our member organizations Community Alliance with…<\/p>","protected":false},"author":13,"featured_media":19358,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"mc4wp_mailchimp_campaign":[],"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[682],"tags":[60,334],"class_list":["post-19356","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-people","tag-california-cap-and-trade","tag-ggrf"],"acf":[],"yoast_head":"\nBroad Coalition Calls for Prioritizing Families and Farmers, Not Fossil Fuel Companies, in Cap-and-Trade Reauthorization | CalCAN - 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