Newsom just approved a sweeping climate overhaul package. Here's what it does
Jeanne Kuang, Cayla Mihalovich
Fri, September 19, 2025
Fri, September 19, 2025
San Francisco Chronicle
Gov. Gavin Newsom announces his approval of a sweeping climate overhaul package Friday in San Francisco. (Lea Suzuki/S.F. Chronicle)
Gov. Gavin Newsom has signed a sweeping package of climate and energy policies to extend the cap-and-trade greenhouse gas emissions program, increase oil drilling and allow the state to create a Western regional electricity market.
The overhaul that Newsom and top lawmakers negotiated in the final days of the legislative session amid heavy lobbying last week reflects urgency in the Democratic Party to preserve its climate goals while reining in the surging gas and energy costs that have threatened to drive voters to the right.
Lawmakers opened the session this year declaring a focus on making California more affordable, after a bruising national election for Democrats. The energy package was central to that goal, with progressives proposing to lower costs with industry regulations.
But after two years declaring special sessions targeting the oil and gas industry, Newsom began to warm up to them as oil refineries announced closures that could send gas prices spiking. As a result, one of the bills he signed Friday would boost domestic oil production in Kern County by approving a long-delayed environmental impact report for new wells.
"We have to effectively transition," Newsom said at an event in San Francisco. "This is not an ideological endeavor. We're in the practical application business. We've got to manifest our ideals and our goals. So this lays it out. But it lays it out without laying tracks over folks."
Gov. Gavin Newsom announces his approval of a sweeping climate overhaul package Friday in San Francisco. (Lea Suzuki/S.F. Chronicle)
Gov. Gavin Newsom has signed a sweeping package of climate and energy policies to extend the cap-and-trade greenhouse gas emissions program, increase oil drilling and allow the state to create a Western regional electricity market.
The overhaul that Newsom and top lawmakers negotiated in the final days of the legislative session amid heavy lobbying last week reflects urgency in the Democratic Party to preserve its climate goals while reining in the surging gas and energy costs that have threatened to drive voters to the right.
Lawmakers opened the session this year declaring a focus on making California more affordable, after a bruising national election for Democrats. The energy package was central to that goal, with progressives proposing to lower costs with industry regulations.
But after two years declaring special sessions targeting the oil and gas industry, Newsom began to warm up to them as oil refineries announced closures that could send gas prices spiking. As a result, one of the bills he signed Friday would boost domestic oil production in Kern County by approving a long-delayed environmental impact report for new wells.
"We have to effectively transition," Newsom said at an event in San Francisco. "This is not an ideological endeavor. We're in the practical application business. We've got to manifest our ideals and our goals. So this lays it out. But it lays it out without laying tracks over folks."
A bill signed by the governor Friday would boost domestic oil production in Kern County by approving a long-delayed environmental impact report for new wells. (Alex Horvath/Tribune News Service)
The biggest part of the complex package he signed were bills to extend the state's cap and trade program, which since 2013 has put a price tag on carbon emissions. The program caps the amount of greenhouse gases that polluting industries can emit and to a limited extent allows companies that cut emissions to sell permits to other companies that pollute. The program raises money for many of the state's climate programs.
The extension leaves the program largely the same, which disappointed environmental justice advocates who argued it has allowed oil and gas to continue polluting near low-income communities. In a nod to those concerns, Newsom also signed another bill in the package that creates a state fund to monitor pollution mitigation in disadvantaged communities.
He also signed two bills affecting the electricity grid. One would allow the state to create a Western regional energy market, allowing the state to trade more electricity with neighbors.
Proponents, including mainstream environmental groups, say the idea would lower prices by allowing California producers to sell excess clean energy during times the state doesn't need it - when it's sunny but not hot, for example, while importing power during heat waves and other high-demand times.
The other bill seeks to lower the cost of transmission infrastructure for customers by setting up a public financing system for building new power lines. It would also prevent some utilities' wildfire mitigation costs from being passed on to customers and replenish the state's wildfire fund by $18 billion. The money, paid by shareholders and ratepayers over the next decade, is used to pay wildfire victims.
The package Newsom signed leaves one imminent concern unaddressed: upcoming refinery closures. Negotiations late in the legislative session to keep two Bay Area refineries open have so far failed to produce any deals.
Assembly Member Lori Wilson, D-Suisun City, wanted the state to support the Benicia Valero refinery, which is now set to close by the end of the year without a deal. (Andri Tambunan/For the S.F. Chronicle)More
Some Democrats simply didn't want to give more to the oil industry, while others disagreed on how much support the state should provide, Assembly Member Lori Wilson, D-Suisun City, told CalMatters last week. Wilson had been pushing for the state to support the Benicia Valero refinery now set to close by the end of the year without a deal, costing the city its largest private employer.
Jeanne Kuang and Cayla Mihalovich write for CalMatters, where this article first appeared.
SOPHIE AUSTIN
Fri, September 19, 2025
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.
Fri, September 19, 2025
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.
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 affecting 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,’" Republican state Sen. Tony Strickland said in a statement. “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.”
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.
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.
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 affecting 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,’" Republican state Sen. Tony Strickland said in a statement. “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.”
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.
Gov. Newsom signs bills aimed at lowering electricity costs, stabilizing gas supply
Iman Palm
Fri, September 19, 2025
Gov. Newsom signs bills aimed at lowering electricity costs, stabilizing gas supply
Gov. Gavin Newsom on Friday signed a legislation package that aims to boost oil drilling, lower electricity costs for Californians, and extend California’s cap-and-trade greenhouse gas emissions program.
The most significant element of the package extends California’s cap-and-trade program, which has set a cost on carbon pollution since 2013. The system limits the amount of greenhouse gas that industries can release. Revenue generated supports a variety of state climate initiatives.
The program, which has remained largely unchanged, has drawn criticism from environmental advocates who argue that it allows oil and gas operations to continue polluting near low-income neighborhoods, according to CalMatters.
To address those concerns, Newsom also approved a measure establishing a state fund to track pollution-reduction efforts in disadvantaged communities.
California’s power grid is the focus of two other bills. One authorizes the creation of a Western regional energy market, allowing California to trade electricity more easily with neighboring states.
The other bill establishes a public financing system for new transmission lines, aiming to reduce infrastructure costs for customers. It also shields ratepayers from some utility wildfire expenses and injects $18 billion into the state’s wildfire fund, which compensates victims.
The fund will be replenished over the next decade through contributions from both shareholders and ratepayers.
The legislation package, which came together towards the end of the legislative session, aims to address affordability in the Golden State.
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Gavin Newsom signs sweeping energy affordability package
Camille von Kaenel, Alex Nieves and Noah Baustin
Fri, September 19, 2025
SAN FRANCISCO — Gov. Gavin Newsom signed a sweeping package of bills on Friday to boost oil drilling, rescue wildfire-threatened utilities and extend the state's landmark climate program as he attempts to rein in energy costs while meeting the state’s ambitious climate targets.
Taken broadly, the package represents a compromise between increasing fossil fuel extraction — which has been on the decline in the nation's eighth-largest oil-producing state — and continuing to ratchet down greenhouse gas emissions.
“We've got to manifest our ideals and our goals, and so this lays it out, but it lays it out without laying tracks over folks," Newsom said, against a backdrop of towering redwood trees projected on the screen of a planetarium in a San Francisco science museum. “We set the tone and pace for the rest of the nation.”
State Democrats opened their legislative session in January with a promise to focus on affordability, which gained even more political urgency as wildfires and refinery closures raised the threat of higher electricity and gasoline costs. The final package of legislation came together only last week, in a last-minute agreement capping weeks of talks between state lawmakers and Newsom’s office.
And it reflects bipartisan support in California's overwhelmingly Democratic Legislature, which needed no Republican votes to pass the package. Two of the bills — the creation of a West-wide energy market and the increase in drilling in Kern County, the state's main oil patch, garnered Republican votes.
“I want to thank the governor for being willing to listen and to understand the situation that we have before us, and his courage to act immediately to stabilize fuel prices for all Californians,” Republican Sen. Shannon Grove, who represents Kern County, said on the Senate floor last week.
The oil drilling package also ratchets up oversight on offshore drilling, a nod to the priorities of soon-to-be Senate President Pro Tem Monique Limón and Central California lawmakers fighting to slow down a Texas-based company that’s moving to quickly restart a Santa Barbara pipeline that spilled in 2015.
Newsom himself only came out in support of extending the state’s cap-and-invest program, which wasn’t scheduled to expire until 2030, after President Donald Trump threatened to dismantle state climate laws in April. The renewal of the carbon market gives him a climate win at a time when the state is losing other core pieces of its climate strategy, like its mandated phase-out of new gas-powered cars by 2035.
The package also includes a spending plan for roughly $4 billion in annual cap-and-invest revenues — known as the Greenhouse Gas Reduction Fund. That plan includes $1 billion in guaranteed yearly funding for high-speed rail, a significant win for a controversial project that saw the Trump administration cancel $4 billion in federal grants earlier this year.
The utilities' wildfire fund will now benefit from an $18 billion boost, funded by utility company shareholders and ratepayers. The new energy legislation also changes how investor-owned utilities finance transmission and wildfire prevention projects, which lawmakers and Newsom are arguing will shave up to several dollars off monthly electric bills.
Newsom claimed the most energy savings would come from the law that paves the way for California to more closely link with its neighboring states in a West-wide energy market.
A separate law will also strengthen air quality monitoring in communities disproportionately impacted by pollution.
A who’s who of California’s energy leaders attended the signing, including legislative leadership, top regulators and high-profile advocates. Newsom’s allies cast the signing as a repudiation of the Trump administration’s attacks on clean energy.
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