California's Cap and Trade Program, now renamed Cap-and-Invest following its extension in 2024, is a market-based system launched in 2013 to reduce greenhouse gas emissions by setting a cap and allowing trading of emission allowances. Authorized under the California Global Warming Solutions Act of 2006 (AB 32), which set a target to reduce emissions to 1990 levels by 2020, and extended by Senate Bill 32 in 2016 to achieve 40% below 1990 levels by 2030, the program establishes a declining cap on total GHG emissions from major sources, covering approximately 76-85% of the state's emissions. It operates by allocating or auctioning emission allowances to covered entities, such as power plants, industrial facilities, and fuel distributors, which must hold sufficient allowances to cover their emissions. Entities can trade these allowances, creating incentives for cost-effective reductions, and the program includes offsets from projects like forestry to meet up to 4-6% of compliance obligations. Launched with compliance obligations starting in January 2013 after a first auction in 2012, it has generated over $31 billion in revenue since inception, primarily from auctions, which funds climate investments including high-speed rail, clean energy, and environmental justice projects. The program is administered by the California Air Resources Board (CARB) and is a key component of California's broader climate strategy, serving as a backstop to sector-specific policies like the Renewables Portfolio Standard and Low-Carbon Fuel Standard. It was developed through public processes dating back to 2008 as part of the state's Scoping Plan and draws on experiences from programs like the Regional Greenhouse Gas Initiative (RGGI) and the European Union Emissions Trading Scheme (EU ETS). In 2014, California linked its program with Québec's cap-and-trade system, enabling cross-border allowance trading and enhancing market liquidity. Recent legislation in 2024, including AB 1207 and SB 840, extended the program through 2045, increased offset limits to 6% from 2026 onward, and rebranded it as Cap-and-Invest to emphasize reinvestment of proceeds into sustainable initiatives. As of 2024, average auction prices reached USD 35.21, with annual revenues around USD 5.13 billion, supporting goals toward 80% below 1990 levels by 2050. Influenced by environmental organizations like the Environmental Defense Fund, the program has faced criticisms for its complexity, potential impacts on low-income communities, and reliance on offsets, but it is praised for driving emissions reductions in the world's fifth-largest economy without significant economic disruption. Ongoing auctions, such as the February 2026 joint auction with Québec, continue to ensure compliance and market signals for transitioning to a low-carbon economy.