Effort to Secure Reliable Funding for Other Agricultural Climate Solutions Will Continue in 2026

The California state legislature passed a final package of bills on September 13 to reauthorize the state’s Cap-and-Invest Program (renamed from Cap-and-Trade) through 2045. 

Assembly Bill 1207, by Assemblymember Jacqui Irwin, makes some important, practical reforms to reduce energy costs for farmers and families and keep the state on track to achieve its critically important climate and clean energy goals. 

Senate Bill 840, by incoming Pro Tem Senator Monique Limón, requires a reevaluation of offsets in the Cap-and-Invest Program and establishes a framework for Greenhouse Gas Reduction Fund (GGRF) appropriations that ensures stable funding of approximately $80 million annually for the Sustainable Agricultural Lands Conservation Program (SALC) under the umbrella of the Affordable Housing and Sustainable Communities program.

SB 840 also expresses the legislature’s intent to direct specific percentages of GGRF to seven categories of climate solutions, including agricultural climate solutions, starting next year, with appropriations for each of those categories to be guided by multiyear spending plans for each category. This intent language represents a compromise between the Assembly, which had championed CalCAN’s proposal for a dedicated percentage of GGRF funding for agricultural climate solutions equivalent to approximately $300- $400 million per year, and the Senate. 

This “dedicated percentage with a multiyear spending plan” approach would have balanced consistency of funding for the agricultural sector with strategic flexibility and oversight for the legislature to incrementally adjust individual program funding levels over time in response to changes in program demand and efficacy, federal funding, new technologies, regulatory pressures, and adoption curves. While we are disappointed the legislature did not determine a percentage of funding for agriculture this year, we appreciate the legislature’s intention to make this approach a reality for agricultural climate solutions next year.

Cap-and-Invest Program Remains a Critical Source of Funding for Agricultural Climate Solutions

The revenue generated by the Cap-and-Invest Program has been a critical source of funding for many of the programs CalCAN has created and advocated for in the past decade, including the Alternative Manure Management Program, Healthy Soils Program, State Water Efficiency and Enhancement Program, Sustainable Agricultural Lands Conservation Program, and Climate Smart Agriculture Technical Assistance Program. These programs have all proven to be cost-effective, multi-beneficial, and in high demand by California farmers and ranchers.

Historically, all of these programs, with the exception of SALC, have had to compete on an annual basis against over 100 other GGRF-funded programs for discretionary GGRF funding, which has resulted in inconsistent boom-and-bust funding cycles that have caused perennial challenges for folks implementing the programs, including farmers and ranchers, technical assistance providers, and California Department of Food and Agriculture staff. That’s why CalCAN and a coalition of 18 other food and farming organizations advocated this year for a dedicated percentage of funding for agricultural climate solutions going forward.

The Assembly’s GGRF spending proposal, championed by Assemblymember Jacqui Irwin and Speaker Robert Rivas, closely mirrored our request and would have resulted in approximately $300-400 million per year for agricultural climate solutions – a transformative level of investment for California’s farmers, ranchers, and agricultural economy.

While we are deeply disappointed that the Assembly’s proposal for agricultural funding was dropped in negotiations with the Senate, we are looking forward to working with sustainable agriculture champions next year to secure a robust percentage and spending plan for sustainable agricultural climate solutions under the framework of SB 840 (Limón).

At the same time, we are grateful for SB 840’s stable funding for the SALC program, as well as the Safe and Affordable Drinking Water Fund and AB 617 Community Air Protection Program. These programs advance CalCAN’s vision of ensuring clean air and water for all communities in California and protecting California’s finite and world-class farmland from sprawling development through conservation easements and better land use planning.

Important, Practical Cap-and-Invest Program Reforms

In the decade ahead, the Cap-and-Invest Program will need to play a more robust role in achieving the state’s climate and clean energy goals, while also making the cost of living more affordable. We applaud the legislature for improving the Cap-and-Invest Program and associated climate credit in meaningful ways. Specifically, CalCAN supports the following reforms in AB 1207 (Irwin) and SB 840 (Limón):

• Aligning the cap on GHG emissions with the state’s 2045 carbon neutrality target
• Transitioning free utility allowances from gas utilities to electric utilities to reduce electricity bills and support the electrification of energy end uses (e.g. vehicles, equipment, irrigation pumps, and appliances)
• Requiring 5% of the value of electrical utilities’ free allowances to fund transmission infrastructure needed to reduce wildfire risk, reduce energy costs, and scale renewable energy deployment
• Reinstating the California Air Resources Board’s authority to allocate free trade-exposed industry allowances based on current and actual leakage risk, an authority that had been removed by AB 398 (E. Garcia, 2017) and resulted in hundreds of millions of dollars worth of unnecessary free allowances for the fossil fuel industry each year since
• Bringing offsets under the cap to ensure that offsets with  unclear climate benefits do not dilute the emissions-reducing impact of the Cap-and-Invest Program
• Requiring greater oversight and consideration of potential reforms to offsets
• Shifting the climate credit, which is a subsidy on ratepayers’ energy bills, from two months in the fall and spring (when energy bills are often the lowest) to the four highest-billed months of the year (when ratepayers will benefit most) and improving communication on utility bills about the credit’s benefit to ratepayers.

CalCAN was part of a broad coalition that advocated for more significant changes to some of the reforms detailed above, including the phaseout of free allowances to the fossil fuel industry and phaseout of offsets over time. These phaseouts would have resulted in more funding for investments in multi-benefit climate programs that more directly lower costs, increase farm viability, and improve resilience for California farmers. We also supported environmental justice advocates’ proposal for AB 617 (C. Garcia, 2017) reforms to strengthen clean air protections for communities, which was excluded from the final Cap-and-Invest package. We stand by those principled positions, and will continue to advocate for those in future years. At the same time, we recognize the incremental reforms described above are meaningful steps forward for the climate and affordability.

After weighing the totality of the reforms, disappointments, and future opportunities above, CalCAN supported the final Cap-and-Invest bills, and we have already started conversations with our legislative allies about how to fulfill the legislature’s commitment to provide more consistent funding for agricultural climate solutions starting next year.

As always, we thank all of the farmers and ranchers and allied organizations who lobbied with us this year in the capitol and on farm tours in legislators’ districts. Your stories and support were heard and acted upon by some powerful champions in the legislature, and we will continue to build on that momentum next year. Stay tuned!