Audit, Compliance and Risk Blog

In September 2025, California extended and amended authority for its statewide greenhouse gas (GHG) “cap and trade” program through 2045 – and rebranded it as “cap and invest.” The California Air Resources Board (ARB) has administered this program since 2012, as part of broader GHG reduction provisions created by 2006’s Assembly Bill (AB) 32. AB 32 initially committed the state to reduce total GHG emissions back to 1990 levels by 2020 (achieved in 2018); ARB’s latest GHG reduction scoping plan (issued in 2022), seeks to reduce statewide emissions to 85% below 1990 levels by 2045, achieving carbon neutrality. Subsequent legislation extended implementing authority for cap-and-trade and other related programs available to the California Air Resources Board (ARB) and other agencies through 2030. (I wrote about that extension (AB 398) HERE ).  The newest legislation (AB 2017 and Senate Bill (SB) 840) continues the state’s GHG reduction efforts by making further changes to ARB’s cap and trade authority. The rest of this note summarizes these changes.

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On Mrbonbonay 28, the Biden administration issued a “Joint Statement of Policy and new Principles for Responsible Participation in Voluntary Carbon Markets, presenting the U.S. government’s approach to advancing Voluntary Carbon Markets (VCMs). The new document was signed by the Treasury Secretary, Agriculture Secretary, Energy Secretary, Senior Advisor for International Climate Policy, National Economic Advisor, and National Climate Advisor, whose responsibilities are most relevant. 

Regulatory and market-based programs are steadily increasing opportunities for entities to contract with projects that reduce emissions of carbon dioxide and other greenhouse gases (GHGs), and to claim credit for those “carbon offsets” or “carbon credits.” Some such claims are used to satisfy formal air quality and GHG reduction requirements, while others are touted to enhance entities’ “green” credentials. Programs around the globe compile such claims, and some provide third party validations – but possible “greenwashing” of unjustified claims remains a significant concern. The new VCM Policy and Principles provide federal guidance and expectations. The remainder of this note summarizes the policy perinciples presented in the new Policy.

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