FOR IMMEDIATE RELEASE
September 19, 2025
Media Contact: Robin Tung, robin@buildingdecarb.org
Cap-and-Invest Program Reauthorized with Groundwork for Stronger Building Decarbonization Commitments
Sacramento, CA — Governor Newsom signed AB 1207 (Irwin) today, reauthorizing California’s Cap-and-Invest program. This extension is essential to meeting the state’s 2045 carbon neutrality target and securing long-term climate investments through the Greenhouse Gas Reduction Fund (GGRF). Reauthorization provides the long-term stability needed for the market to meet the state’s climate goals and expand equitable access to clean energy solutions for Californians.
“AB 1207 provides the foundation for long-term climate progress in California,” said Beckie Menten, California Director at the Building Decarbonization Coalition. “The state’s climate policy is working––our electricity is increasingly cleaner and growing at record speed to power our homes, buildings, and businesses. We look forward to working with state leaders to keep the momentum and secure the funding needed to deliver affordable, climate-ready homes for Californians.”
Buildings produce about 25% of the state’s greenhouse gas emissions and are a major source of indoor and outdoor air pollution, particularly in frontline communities. Investing in decarbonizing California’s homes and businesses will improve energy efficiency in homes and help lower bills, protect public health, improve air quality, and provide life-saving resilience as extreme heat intensifies.
“Extending the Cap-and-Invest program gives California the tools to cut climate pollution while reinvesting in the health, safety, and affordability of Californians,” said Ben Stapleton, Executive Director, USGBC California. “Now we need to make sure those investments flow into programs that directly improve our buildings to clean the air, lower energy bills, and protect Californians from the rising risks of extreme heat and wildfire.”
Key actions in AB 1207 include:
- Shifting climate credits to electric bills. AB 1207 directs utility regulators to “design the regulations, including distribution of emissions allowances where appropriate, in a manner that transitions support from gas corporations to electrical distribution utilities.” This redirection of climate credits away from gas bills to electric bills sends a clear signal that the state is committed to phasing out reliance on gas while supporting affordable, reliable, and clean power.
- Maintaining $1 Billion in Discretionary Funding. This revenue ensures that California has the resources to fund critical climate programs. Prioritizing building decarbonization with these funds can make energy bills more affordable for families, improve indoor and outdoor air quality, and help create climate-ready homes that protect against extreme heat and worsening climate impacts.
- Creating the Climate Mitigation Fund. The new fund offers a direct mechanism for upgrading California homes, advancing clean transportation, and ensuring climate resilience. This is a mission-critical step for ensuring equitable access to building decarbonization.
AB 1207 marks a pivotal step in California’s climate policy, but the work ahead is critical. By scaling programs like TECH Clean California and the Equitable Building Decarbonization Program, the state can expand access to clean, efficient heat pumps, lower household energy costs, and provide life-saving cooling in the face of extreme heat. With sustained, large-scale investment, California can deliver on its goals of 6 million heat pumps by 2030 and 7 million climate-ready homes by 2035—ensuring that California communities share in the benefits of healthier, more affordable, and climate-resilient homes.