This report describes and analyzes selected aspects of California’s statewide greenhouse gas cap-and-trade program, which went into effect in 2012. The system is one component of California’s overall strategy for achieving its state-wide greenhouse gas emissions reduction targets. As countries around the world consider the use of emissions trading, this analysis is intended to help regulators to increase environmental ambition, improve the integrity of emissions reductions, and take advantage of political and economic opportunities created by emissions trading.

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The report is part of a collaboration among researchers at Tsinghua University, the California-China Climate Institute, UCLA School of Law, and Wuhan University. Since 2020, the research partners convened a series of projects and events to share ideas and best practices and to discuss ways to improve the design and implementation of emissions trading systems. This report and another, Theory and Practice of China’s Carbon Emissions Trading System – Key Issues in China’s National ETS and Case Study of Hubei Pilot ETS; are key outputs of this collaboration.