Housing and Climate Change

What is Cap-and-Trade? 

Cap-and-Trade is a program developed by the California Air Resources Board to reduce greenhouse gas emissions, as required by the Global Warming Solutions Act of 2006 (AB 32). Large companies that emit a certain amount of greenhouse gas (GHG) emissions are assigned a "cap" (limit) on their emissions. Those that exceed their cap must either ratchet down those emissions over time (through improvements to their facilities) OR buy "allowances to pollute" through a quarterly state auction. (Companies that produce less than their allocated GHG emissions can "trade" (selltheir allowances to other companies.) Learn more on our Cap-and-Trade 101 page


What is the scientific link between housing and GHG reductions?

The California Air Resources Board, California Air Pollution Control Officers Association, Center for Neighborhood Technology, and other reputable organizations have compiled substantial evidence (see Research, below) that transit-oriented development affordable to lower-income households is an effective GHG-reduction strategy.

Basic story the research tells: 


  • A majority of households on modest budgets own a car, usually an older, higher-polluting one. Presented with the opportunity to move close to high-quality transit, sell their car, and ride a bus or light rail, people with modest incomes are likely to jump at the chance, because a car represents a significant financial burden to them. (By contrast, higher-income households may use transit to get to work, but are much more likely to retain their car).

  • Additionally, transit-oriented development affordable to people on modest budgets can help prevent the displacement that occurs when transit -- a desirable amenity -- causes rents and property values to increase in the surrounding area. Research has shown that displacement of low-income residents robs transit systems of core riders and results in fewer GHG reductions from transit investments. Moreover, displaced residents often relocate to areas with cheaper housing at the outskirts of metropolitan areas, forcing them to rely on older, high-polluting cars to access jobs and services.

  • This means investments in TOD affordable to lower-income households will give the state the biggest GHG benefit. It will also make the most of the state’s transit investments, ensuring ridership for decades to come (because the developments must remain affordable for at least 55 years).

The Affordable Housing and Sustainable Communities Program (AHSC)

In 2014, the Legislature and governor approved the AHSC Program, which provides investment from cap-and-trade revenues to affordable homes and other components of sustainable communities, including bike and walking improvements, transit, and planning. The Program receives an annual continuous appropriation from cap-and-trade revenues. To date, 58 developments have been funded, creating 4,500 new affordable homes. Each year, these developments will remove 8,000 vehicles from our roads and reduce 1.1 million metric tons of carbon dioxide from the atmosphere over 30 years.  Housing California will continue to participate in discussions around the administration of the funds.

Read this 2017 policy brief to learn more. 

Research & Resources


Investment of Cap-and-Trade Funds Would Yield Reduction of More Than 100 Million Miles of Driving Annually 


Why Creating and Preserving Affordable Homes Near Transit Is a Highly Effective Climate Protection Strategy

(TransForm and the California Housing Partnership Corporation, based on robust new analysis by leading national research organization, the Center for Neighborhood Technology, May 2014) This report proves climate change-fighting power of building affordable homes near transit. The report reveals:


  • Lower-income households in California within 1/4 mile of frequent public transportation drive nearly 50 percent less than those living in areas without good transit.

  • Lower-income households that live near transit drive significantly less than households at higher incomes that live the same distance from transit. 




Why Cap-and-Trade Auction Proceeds Should Fund Affordable Homes Near Transit (California Housing Partnership Corporation, with Housing California and TransForm, 2013) This easy-to-understand, 4-page white paper explains why the Transit-Oriented Development (TOD) Housing Program is a key component of an integrated approach to cut greenhouse-gas (GHG) emissions while providing transportation and housing choices that allow Californians to drive less and reduce household costs, especially households on modest budgets. Compliments a longer Literature Review prepared by the California Housing Partnership.


This 2017 policy brief is helpful for talking to legislators and others about why Cap-and-Trade funds should be spent on existing programs that have a proven track record reducing GHG emissions. 



Cap-and-Trade Auction Proceeds: Benefits of Investments in the Proposed Fiscal Year 2014-15 Budget (Department of Finance/Air Resources Board, April 30, 2014) See Sustainable Communities Program on the first page of the chart and footnote #2 on the second page of the chart, explaining that all of the estimated GHG reductions for that program are based on investing the funds in transit oriented development. 



Quantifying Greenhouse Gas Mitigation Measures: A Resource for Local Governments to Assess Emissions Reductions from Greenhouse Gas Mitigation Measures (CA Air Pollution Control Officers Association, August 2010.) See pages 155-185.