Cap and Trade | Advocate + Lead | Our Work

Cap and Trade

California’s Cap and Trade program for greenhouse gas emissions presents an important new funding opportunity for Bay Area transportation.

The Cap and Trade program reduces pollution by imposing limits on emissions — which become more stringent each year.


Cap and Trade — Quick Overview

Major emitters must buy an allowance — through an auction process — for every ton of carbon dioxide they release into the air.

State law requires that auction proceeds be spent on projects that reduce greenhouse gas emissions.

MTC helps make sure the Bay Area submits projects that will compete well against those from other parts of the state — and will help accomplish our region’s short- and long-term transportation goals. Download the background, framework and details in the MTC Funding Framework for Cap and Trade.

Investment Strategy

Sixty percent of the Cap and Trade program’s ongoing revenues go for investment in Sustainable Communities and Clean Transportation. 

This includes:

  • High Speed Rail Project — 25 percent
  • Affordable Housing and Sustainable Communities — 20 percent
  • Transit and Intercity Rail — 10 percent
  • Low-Carbon Transit Operations — 5 percent


The California Air Resources Board oversees the Cap and Trade program.

Investments made with Cap and Trade auction proceeds include the California High Speed Rail system and a statewide Transit and Intercity Rail program.

State law requires 10 percent of Cap and Trade funds to be spent within disadvantaged communities.

We believe the method used by the California Environmental Protection Agency to define “disadvantaged community” overlooks many of our low-income neighborhoods.

MTC is working to have this definition revised. Here is a letter sent by MTC to Bay Area legislators on the subject.