California’s covered emissions fell 26%. Its carbon price sat at the floor for eight of the first nine years.

California reauthorised its carbon market to 2045 last September and renamed it Cap-and-Invest. That is a good moment to ask what the first eleven years bought. We rebuilt the answer from CARB's own facility records, 11,204 facility-years across 2013–2024, and split the reduction by obligation type. Emissions fell hard. The share attributable to the carbon price itself is smaller than the headline suggests.

None of what follows is an argument for repeal. A cap that binds is worth having, and the 2045 extension settles a question the market had been pricing as political risk since 2024. The narrower question is whether the price did the work, or whether the mandates did it and the cap kept score.

Covered emissions fell 91.9 Mt, and two sectors delivered 87% of it

California's covered emissions ran 348.5 MtCO2e in 2013 and 256.6 Mt in 2024. Splitting that by the obligation each tonne carries under §95852 gives three very different stories.

Obligation type	2013 (Mt)	2024 (Mt)	Change	Share of total fall
Electricity (in-state generation, cogen, imports)	81.4	41.9	−48.5%	43%
Fuel suppliers (RBOB, distillate, natural gas, LPG)	202.9	162.1	−20.1%	44%
Industry (facility combustion and process)	64.3	52.5	−18.2%	13%
Total covered	348.5	256.6	−26.4%	100%

Exhibit 1 — CARB Mandatory Reporting Regulation facility and entity emissions, 2013 and 2024 vintages. Industry is the emitter column net of electricity-sector facilities.

Each of those three sectors sits under a different mix of policy. Reading them separately is what makes the attribution question answerable at all.

Electricity fell 48.5%, and it had its own binding mandate

Electricity is 43% of the whole reduction from 24% of the 2013 base. Within it, emissions from imported power fell from 36.2 Mt to 12.2 Mt, a 66% drop, as coal-by-wire contracts with out-of-state plants expired and were not renewed.

California's Renewables Portfolio Standard required 33% renewable electricity by 2020, and SB 100 raised that to 60% by 2030 and 100% carbon-free retail sales by 2045. A utility missing an RPS target faces penalties whatever the allowance price does. The mechanism that retired those coal contracts was contract expiry against a rising renewable procurement obligation, and a $13 allowance would not have moved it either way.

Fuel fell 20.1% under a tightening LCFS and a vehicle mandate

Fuel is the largest block at 63% of the 2024 obligation, and it contributed 44% of the reduction. Over the same period the Low Carbon Fuel Standard ratcheted its carbon-intensity benchmark, Advanced Clean Cars II set a schedule ending new internal-combustion sales in 2035, and federal fuel-economy standards tightened.

Those instruments price carbon far above the allowance market. An LCFS credit has traded in the tens to low hundreds of dollars per tonne through most of the period, on top of the allowance cost. A fuel supplier deciding how much renewable diesel to blend was answering the LCFS, not the cap.

Industry fell 18.2%, and 62% of that was plants closing

Industry is where cap-and-invest comes closest to being the only carbon instrument in the room. There is no RPS for a cement kiln and no ZEV mandate for a refinery furnace. It is also the block that moved least.

Tracking individual facilities across the full period separates two things the aggregate hides. Of the 11.7 Mt the block lost, roughly 7.3 Mt came from 57 facilities leaving the programme entirely — 35 of them gone from the reporting file altogether, including the Tesoro Los Angeles refinery, Lehigh's Cupertino cement plant and the Phillips 66 Santa Maria refinery. The remaining 4.4 Mt came from plants that stayed open.

Measured only on the plants still operating in 2024, California industry decarbonised at 0.76% a year. The sector detail is starker.

Sector	Share of industrial block	Rate at surviving plants
Refining and hydrogen	50.2%	−0.74%/yr
Oil and gas production	12.8%	+0.01%/yr
Cement	12.6%	+0.54%/yr
Other combustion	12.9%	−0.26%/yr

Exhibit 2 — Compound annual rate 2013–2024, facilities reporting in both years, sector pinned to each facility's latest classification.

Cement emissions grew. That is the sector where roughly 60% of the CO2 comes from calcining limestone rather than burning fuel, which makes it the textbook case for carbon capture and the hardest thing to abate without it. Across the whole block, 81% of industrial emissions sit in sectors declining slower than 1% a year.

The allowance price cleared at or near its floor for eight of the first nine years

The other half of the attribution question is what price the market was actually paying while these reductions happened.

Year	Settlement (USD/t)	Floor (USD/t)	Premium	Auctions clearing at floor
2013	10.75	10.75	0.00	100%
2016	12.73	12.73	0.00	100%
2020	17.04	16.68	0.36	50%
2024	35.23	24.04	11.19	0%
2026	27.94	27.94	0.00	100%

Exhibit 3 — California–Québec joint auction results, annual means. Selected years; the full series runs 2013–2026.

For the first eight years the allowance price essentially was the reserve price. A genuine scarcity premium appeared only from 2021 and peaked at $11.19 over the floor in 2024. In 2026 every auction has again cleared at the floor.

CARB's own cost ladder starts at $73. The market paid $12.

The 2024 Standardized Regulatory Impact Assessment publishes an abatement cost ladder for the covered sectors. Its cheapest rung is carbon capture and storage at $73 per tonne in 2023 dollars, with a range of $48 to $100. Nothing on that ladder is economic against a market clearing in the teens.

This is the mechanism behind Exhibit 2. A carbon price below every available abatement option does not produce abatement. It produces compliance — buy the allowance, pass through the cost, keep operating. When the price finally rose past $30 in 2023–24, the response available on that timescale was closure rather than retrofit, because a cement kiln is a ten-year capital decision and an allowance price that has been volatile for a decade is a poor basis for one.

Where this argument stops

Four things cut against the reading above, and they are not small.

The cap is a guarantee, not a nudge. Whatever delivers the tonnes, the cap sets the ceiling. If the RPS had underdelivered or the ZEV rule had slipped, the binding constraint would have been the allowance budget, and the price would have risen to enforce it. Insurance that never pays out has still been doing its job.

Muting the industrial price signal was deliberate. Free allocation under §95891 exists to stop trade-exposed industry relocating to jurisdictions with no carbon price. Industry receiving a weak signal is the design operating as intended, and criticising the outcome without naming the trade-off misreads it.

Closures may be leakage rather than abatement. A refinery that shuts and is replaced by imported product has moved emissions, not removed them. This argument cuts against the programme's effectiveness, not for it, and our facility data cannot distinguish the two.

Revenue is a second channel. Auction proceeds have funded transit, efficiency and other programmes through the Greenhouse Gas Reduction Fund. Those abate emissions too, and the reductions land outside the covered sectors where this analysis can see them.

There is also no clean counterfactual. Nobody observes the California that did not price carbon. Attribution studies exist and reach a range of conclusions, and anyone claiming precision here is overreaching.

What would change our reading

Facility production data. CARB flags 117 facilities as reporting product data — the allocation recipients. The quantities are unpublished. If output at surviving plants grew while emissions held flat, intensity improved and the picture softens considerably.

The first Modernization and Decarbonization Incentive awards, due from 1 June 2027. The 2025 amendments carve out 118.3 Mt of allowances for industrial modernisation projects. CARB's Board resolution expects a first-year award unlikely to exceed 30 million allowances. A large first-year draw would show a project pipeline that eleven years of flat intensity does not suggest exists.

Whether the 2026 floor-clearing persists. Every 2026 auction has settled at the reserve price. If that continues into 2027 with the reauthorisation resolved and the budgets tightening, it says the cap is not binding at the current trajectory.

What we take from it

California's carbon market has been an effective accounting system and a modest price signal. The tonnes came overwhelmingly from sector mandates that operate independently of it, and in the one sector where the price stood more or less alone, the response was to close plants rather than to change them.

The design question that follows is whether a reauthorised programme running to 2045 should keep relying on complementary mandates to deliver, or whether the price needs to reach the abatement ladder CARB itself published. The MDI carve-out suggests CARB has reached its own conclusion, choosing to subsidise industrial decarbonisation directly rather than wait for the price to trigger it. Whether that works is answerable from 2027, and we will be reading those award figures closely.