The new SB 840 bill introduced in the California State Senate aims to extend and expand the state’s flagship climate program while channeling billions of dollars into clean energy and community resilience.
SB 840, authored by Senators Monique Limón and Mike McGuire, proposes reauthorizing California’s Cap-and-Trade program through 2045 and establishing a long-term framework for the use of Greenhouse Gas Reduction Fund (GGRF) revenues.
Cap-and-Trade, launched over a decade ago, sets a declining cap on greenhouse gas emissions while allowing regulated entities to trade allowances.
The program not only reduces emissions but also generates billions in proceeds that are reinvested in climate initiatives across the state.
Under current law, the program’s reduction targets were set for 2021–2030. SB 840 would extend the system for another 15 years, offering long-term certainty to businesses and investors while strengthening California’s role as a climate leader.
Billions Directed Toward Climate Priorities
The proposal includes a new funding allocation plan: $3 billion annually from the GGRF would be dedicated to ongoing climate programs, while an additional $1 billion or more each year would be reserved for legislative priorities.
The funding supports a wide array of initiatives, from wildfire prevention and habitat restoration to clean energy deployment, urban greening, and community protections. Supporters of SB 840 describe Cap-and-Trade as California’s most cost-effective emissions reduction tool, pointing out that it simultaneously drives down pollution and secures stable revenue for climate action.
“This is a chance to show sorely-needed leadership to align climate ambition with affordability and protect Californians from federal climate cuts,” said Vikrum Aiyer, Head of Global Policy at Heirloom.
Relevant: EPA Rollback Set To Erase Carbon Emissions Reporting And Limits
Reauthorization would ensure continued investment in transformative projects while sending a strong market signal to companies developing and deploying climate technologies.
By renewing Cap-and-Trade and expanding climate investments, SB 840 seeks to safeguard public health, enhance resilience to climate impacts, and spur economic opportunity across California.
The legislation positions the state to not only meet its emissions reduction goals but also to remain a hub for innovation in climate solutions.
Read more: California Advances Bill To Promote Biomass In Climate Strategy
