Carbon Pollution Pricing
Carbon pricing is a market-based mechanism that aims to reduce the amount of greenhouse gases (GHGs) emitted by imposing a fee or a cap on carbon dioxide emissions. Regulated entities can either reduce emissions and stay under the cap, or continue emitting and pay more. The revenue generated from these polluter fees are often reinvested in communities facing the brunt of environmental and climate harms. This policy intervention aims to shift the cost of harmful pollution to emitters, rather than the public, based on the social cost of carbon.
There are various forms of carbon pricing. One common form is through an emissions trading system (ETS) such as cap-and-trade, which establishes an upper limit (“cap”) on total emissions, and then divides this cap into emissions permits or credits that are distributed to all regulated entities, either for free or through an auction. Those that reduce their emissions can trade any unused credits on the carbon market; emitters who do not reduce their emissions enough can then buy those unused emissions credits, and emissions in the overall ETS stay below the established cap. Another form is through a carbon tax, which directly prices carbon through a specific tax rate per ton of emissions. A carbon tax relies on emitters changing their behavior to avoid incurring increased costs from emissions.
Key Resources
States with Statutory Greenhouse Gas Reduction and Reporting Requirements
Environmental Justice and Carbon Pricing: Can They Be Reconciled?
Carbon Pricing Explainer Series
Carbon Pricing
Model States
California
California's Cap-and-Trade Program covers the electricity, buildings, transportation, and industrial sectors, covering around 80% of state emissions.
2025 law extends the program through 2045.
Massachusetts
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector.
New York
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector.
The state is also developing an economy-wide cap-and-invest program aligned, with implementation expected in 2028.
Washington
Washington's Cap-and-Invest Program covers the electricity, buildings, transportation, and industrial sectors, covering around 75% of state emissions.
Carbon Pollution Pricing By State
| Status | State Sort descending | Region | Components | Year Enacted | |
|---|---|---|---|---|---|
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southwest | |||
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Enacted |
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California's Cap-and-Trade Program covers the electricity, buildings, transportation, and industrial sectors, covering around 80% of state emissions. 2025 law extends the program through 2045. Establishing Policies
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|
West | 2025 | ||
| Enacted |
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Colorado's baseline-and-credit trading system allows industrial sources emitting over 25,000 metric tons of CO2e per year to generate and purchase credits generated when these sources reduce their emissions more than required for 2030. The system also allows gas distribution utilities to purchase recovered methane credits from eligible projects for use towards their clean heat targets. The industrial market will also expand to allow for midstream oil and gas operators to participate in 2028. Establishing Policies
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|
West | 2023 | ||
| Enacted |
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The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
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|
Northeast | 2024 | ||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Southeast | 2018 | ||
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
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State agencies are prohibited from developing any greenhouse gas pricing mechanisms. Establishing Policies
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|
Midwest | |||
| Not Enacted |
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Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Northeast | 2026 | ||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Southeast | 2026 | ||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Northeast | 2025 | ||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Northeast | 2022 | ||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Northeast | 2025 | ||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southwest | |||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. The state is also developing an economy-wide cap-and-invest program aligned, with implementation expected in 2028. Establishing Policies
Empty column
|
Northeast | 2026 | ||
| Not Enacted |
Empty column
The 2023 budget included language that prohibits the governor and state agencies from requiring electric utilities to join a cap-and-trade program. Establishing Policies
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|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Establishing Policies
Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southwest | |||
| Enacted |
Empty column
The Climate Protection Program sets an enforceable declining cap on greenhouse gas emissions from fossil fuels used throughout Oregon, including diesel, gasoline, and natural gas. The program is designed to reduce these emissions by 50% by 2035 and 90% by 2050. Establishing Policies
Empty column
|
West | 2024 | ||
| Not Enacted |
Empty column
Pennsylvania developed a regulation in 2022 to participate in the Regional Greenhouse Gas Initiative (RGGI), which is a cap-and-trade program that covers the electricity sector. In July 2022, the Commonwealth Court of Pennsylvania halted the state’s participation due to ongoing lawsuits regarding the regulation, and in November 2023, ruled that RGGI participation violates the state constitution. Establishing Policies
Empty column
|
Northeast | |||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Establishing Policies
Empty column
|
Northeast | 2026 | ||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West | |||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. The state also issued a study on expanding regional cap-and-invest program to other sectors, potentially including transportation and heating. The report notes that benefits of a cap-and-invest program would not be fully realized until the mid-2030s, and could not contribute to the 2030 GWSA target, but would more likely to support the 2050 target. Establishing Policies
Empty column
|
Northeast | 2026 | ||
| Enacted |
Empty column
The Regional Greenhouse Gas Initiative (RGGI) covers the electricity sector. Virginia rejoined RGGI in 2026, and by January 1, 2027, update the regulation to align with the latest RGGI model rule. Establishing Policies
Empty column
|
Southeast | 2026 | ||
| Enacted |
Empty column
Washington's Cap-and-Invest Program covers the electricity, buildings, transportation, and industrial sectors, covering around 75% of state emissions. Establishing Policies
Empty column
|
West | 2023 | ||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Southeast | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
Midwest | |||
| Not Enacted |
Empty column
Carbon pollution pricing establishes a pollution fee or cap-and-trade program on the greenhouse gas emissions associated with each sector/source of emissions within the state. Programs typically cover the electricity, buildings, transportation, and/or industrial sectors. Empty column
|
West |