Renewing Cap and Trade program to help fund public transportation
California's Cap-and-Trade program provides significant funding for public transportation in the Bay Area and statewide. This is fitting since transportation is the single largest source of greenhouse gas emissions in the region and the state. Over the last decade, the Bay Area has secured over $5 billion for public transit and affordable housing near transit from the program, according to last week’s summary from the Metropolitan Transportation Commission. The funds have supported a range of needs including major rail and bus projects, bus electrification, and student transit discount programs.
Cap-and-Trade Nominal Auction Proceeds. Source: Congressional Research Service, The California Cap-and-Trade Program - Overview and Considerations for Congress (2024)
Currently, roughly 5% of Cap and Trade program’s ongoing revenues go to funding transit service through the Low Carbon Transit Operations Program (LCTOP) and 10% for transit capital projects through the Transit and Intercity Rail Capital Program (TIRCP). 25% of Cap and Trade funds also go to High Speed Rail, while additional funds support affordable housing with high-quality transit access, wildfire prevention and clean water.
The program, which started in 2012, expires in 2030 and needs to be reauthorized in order to continue. The reauthorization of the Cap-and-Trade Program is a critical opportunity for improvement.
In March, a coalition of advocates for transit, housing, and environmental justice sent a letter urging the legislature to use these priorities when reauthorizing the program.
Add additional flexibility to existing Greenhouse Gas Reduction Fund transit programs to help address our state’s current transportation needs.
Protect, and if possible expand, current percentages of Cap and Trade continuous appropriation for the time-proven Affordable Housing Sustainable Communities Program (AHSC), the Transit and Intercity Rail Capital Program (TIRCP), and the Low Carbon Transit Operations Program (LCTOP).
Support the recommendations of the Environmental Justice community to reform the Cap-and-Trade program design and expenditures and maintain, or possibly expand, SB 535 and AB 1550 investment requirements in impacted communities.
Governor Newsom's proposed 2025-26 Cap-and-Trade Expenditure Plan. Source: Legisaltive Analysis Office, The 2025-26 Budget Cap-and-Trade Expenditure Plan.
Reauthorizing the Cap and Trade program is a key piece of the puzzle with statewide, regional, and local funding and reforms needed to save and improve transit. We’ll keep you posted on opportunities to reauthorize California’s Cap and Trade program with priorities to continue and increase funding for public transportation.