Kyle Meng
@kylemeng.com
Professor at UCSB Bren School and Econ Dept. Climate and Energy Director at emLab. Former White House CEA Senior Climate Economist. Associate at @nber.org @csis.org. Board member @ucsusa.bsky.social. Personal views. www.kylemeng.com
Many thanks to Gov. Newsom, CA legislators, & staff for their tireless efforts to get us here.
Mighty proud to be a Californian today. /n
Mighty proud to be a Californian today. /n
September 10, 2025 at 10:55 PM
Many thanks to Gov. Newsom, CA legislators, & staff for their tireless efforts to get us here.
Mighty proud to be a Californian today. /n
Mighty proud to be a Californian today. /n
This is a strong bill. It double downs on CA’s climate commitment for next 20 years—balancing ambition & affordability.
It may also well be the most important U.S. climate policy for the foreseeable future. 9/
It may also well be the most important U.S. climate policy for the foreseeable future. 9/
September 10, 2025 at 10:55 PM
This is a strong bill. It double downs on CA’s climate commitment for next 20 years—balancing ambition & affordability.
It may also well be the most important U.S. climate policy for the foreseeable future. 9/
It may also well be the most important U.S. climate policy for the foreseeable future. 9/
5. Tackling leakage
Previously, free permits granted regardless of industry’s leakage risk.
But too many free permits mean less revenue.
Now, post-2030 free allocations must consider each sector’s leakage risk. 8/
Previously, free permits granted regardless of industry’s leakage risk.
But too many free permits mean less revenue.
Now, post-2030 free allocations must consider each sector’s leakage risk. 8/
September 10, 2025 at 10:55 PM
5. Tackling leakage
Previously, free permits granted regardless of industry’s leakage risk.
But too many free permits mean less revenue.
Now, post-2030 free allocations must consider each sector’s leakage risk. 8/
Previously, free permits granted regardless of industry’s leakage risk.
But too many free permits mean less revenue.
Now, post-2030 free allocations must consider each sector’s leakage risk. 8/
4. Smarter offsets
Offsets lower costs but raise integrity concerns.
AB 1207 has a new idea: for every offset used, the cap tightens.
Emissions stay under the cap and compliance costs fall vs. banning offsets outright. 7/
Offsets lower costs but raise integrity concerns.
AB 1207 has a new idea: for every offset used, the cap tightens.
Emissions stay under the cap and compliance costs fall vs. banning offsets outright. 7/
September 10, 2025 at 10:55 PM
4. Smarter offsets
Offsets lower costs but raise integrity concerns.
AB 1207 has a new idea: for every offset used, the cap tightens.
Emissions stay under the cap and compliance costs fall vs. banning offsets outright. 7/
Offsets lower costs but raise integrity concerns.
AB 1207 has a new idea: for every offset used, the cap tightens.
Emissions stay under the cap and compliance costs fall vs. banning offsets outright. 7/
3. Making electricity more affordable
Electricity in CA is too costly, slowing electrification and making adaptation expensive.
AB 1207 directs more revenue to the CA Climate Credit, boosting bill relief, especially during hot months when families need it most. 6/
Electricity in CA is too costly, slowing electrification and making adaptation expensive.
AB 1207 directs more revenue to the CA Climate Credit, boosting bill relief, especially during hot months when families need it most. 6/
September 10, 2025 at 10:55 PM
3. Making electricity more affordable
Electricity in CA is too costly, slowing electrification and making adaptation expensive.
AB 1207 directs more revenue to the CA Climate Credit, boosting bill relief, especially during hot months when families need it most. 6/
Electricity in CA is too costly, slowing electrification and making adaptation expensive.
AB 1207 directs more revenue to the CA Climate Credit, boosting bill relief, especially during hot months when families need it most. 6/
2. Explicit link to CA climate targets
For the first time, CA carbon market is explicitly tied to CA GHG goals:
-40% cut by 2030 (vs 1990)
-85% cut (vs 1990) & net-zero by 2045
This means financial consequences if CA fall short 5/
For the first time, CA carbon market is explicitly tied to CA GHG goals:
-40% cut by 2030 (vs 1990)
-85% cut (vs 1990) & net-zero by 2045
This means financial consequences if CA fall short 5/
September 10, 2025 at 10:55 PM
2. Explicit link to CA climate targets
For the first time, CA carbon market is explicitly tied to CA GHG goals:
-40% cut by 2030 (vs 1990)
-85% cut (vs 1990) & net-zero by 2045
This means financial consequences if CA fall short 5/
For the first time, CA carbon market is explicitly tied to CA GHG goals:
-40% cut by 2030 (vs 1990)
-85% cut (vs 1990) & net-zero by 2045
This means financial consequences if CA fall short 5/
1. Extension to 2045
Past renewals every 10 yrs cause market crashes & uncertainty.
AB 1207 extends program to 2045.
A 20 year carbon price signal for clean investment in the world’s 4th-largest economy. 4/
Past renewals every 10 yrs cause market crashes & uncertainty.
AB 1207 extends program to 2045.
A 20 year carbon price signal for clean investment in the world’s 4th-largest economy. 4/
September 10, 2025 at 10:55 PM
1. Extension to 2045
Past renewals every 10 yrs cause market crashes & uncertainty.
AB 1207 extends program to 2045.
A 20 year carbon price signal for clean investment in the world’s 4th-largest economy. 4/
Past renewals every 10 yrs cause market crashes & uncertainty.
AB 1207 extends program to 2045.
A 20 year carbon price signal for clean investment in the world’s 4th-largest economy. 4/
AB 1207 reauthorizes the core of CA’s carbon market and reinforces it in 5 key ways.
Here’s what’s new: 3/
Here’s what’s new: 3/
September 10, 2025 at 10:55 PM
AB 1207 reauthorizes the core of CA’s carbon market and reinforces it in 5 key ways.
Here’s what’s new: 3/
Here’s what’s new: 3/
Cap-and-invest is California’s centerpiece climate policy.
It ensures the state hits its climate targets affordably & generates billions in revenue.
It is also a pillar with other carbon markets for global climate cooperation. 2/
It ensures the state hits its climate targets affordably & generates billions in revenue.
It is also a pillar with other carbon markets for global climate cooperation. 2/
September 10, 2025 at 10:55 PM
Cap-and-invest is California’s centerpiece climate policy.
It ensures the state hits its climate targets affordably & generates billions in revenue.
It is also a pillar with other carbon markets for global climate cooperation. 2/
It ensures the state hits its climate targets affordably & generates billions in revenue.
It is also a pillar with other carbon markets for global climate cooperation. 2/
There are a lot more details.
And many more to be worked out over the next few weeks.
But this is a very strong reauthorization bill.
AB 1207 shows CA can once again lead on climate with economically smart, environmentally sound policy. All while addressing our affordability challenges. /n
And many more to be worked out over the next few weeks.
But this is a very strong reauthorization bill.
AB 1207 shows CA can once again lead on climate with economically smart, environmentally sound policy. All while addressing our affordability challenges. /n
August 22, 2025 at 7:14 PM
There are a lot more details.
And many more to be worked out over the next few weeks.
But this is a very strong reauthorization bill.
AB 1207 shows CA can once again lead on climate with economically smart, environmentally sound policy. All while addressing our affordability challenges. /n
And many more to be worked out over the next few weeks.
But this is a very strong reauthorization bill.
AB 1207 shows CA can once again lead on climate with economically smart, environmentally sound policy. All while addressing our affordability challenges. /n
#5: Allowing offsets w/ co-benefits & additionally
Offsets are far from perfect. But they do bring cost containment & other benefits.
AB 1207 strikes a nice balance: it expands offsets only if they bring in nature-based solutions from native tribes or use CDR (which are clearly additional). 8/
Offsets are far from perfect. But they do bring cost containment & other benefits.
AB 1207 strikes a nice balance: it expands offsets only if they bring in nature-based solutions from native tribes or use CDR (which are clearly additional). 8/
August 22, 2025 at 7:14 PM
#5: Allowing offsets w/ co-benefits & additionally
Offsets are far from perfect. But they do bring cost containment & other benefits.
AB 1207 strikes a nice balance: it expands offsets only if they bring in nature-based solutions from native tribes or use CDR (which are clearly additional). 8/
Offsets are far from perfect. But they do bring cost containment & other benefits.
AB 1207 strikes a nice balance: it expands offsets only if they bring in nature-based solutions from native tribes or use CDR (which are clearly additional). 8/
AB 1207 directs C&T permit revenue towards lowering household electricity prices during the highest use (ie summer) months.
Our @emlab.ucsb.edu analysis shows that this can lower household electricity prices by 13-19% across the state. 7/
Our @emlab.ucsb.edu analysis shows that this can lower household electricity prices by 13-19% across the state. 7/
emlab.ucsb.edu
August 22, 2025 at 7:14 PM
AB 1207 directs C&T permit revenue towards lowering household electricity prices during the highest use (ie summer) months.
Our @emlab.ucsb.edu analysis shows that this can lower household electricity prices by 13-19% across the state. 7/
Our @emlab.ucsb.edu analysis shows that this can lower household electricity prices by 13-19% across the state. 7/
#4: Making electricity affordable
C&T is the most affordable way to meet CA climate targets.
But C&T permit revenue can also lower CA’s too-high electricity prices, which slow electrification and hinder climate adaptation. 6/
C&T is the most affordable way to meet CA climate targets.
But C&T permit revenue can also lower CA’s too-high electricity prices, which slow electrification and hinder climate adaptation. 6/
August 22, 2025 at 7:14 PM
#4: Making electricity affordable
C&T is the most affordable way to meet CA climate targets.
But C&T permit revenue can also lower CA’s too-high electricity prices, which slow electrification and hinder climate adaptation. 6/
C&T is the most affordable way to meet CA climate targets.
But C&T permit revenue can also lower CA’s too-high electricity prices, which slow electrification and hinder climate adaptation. 6/