Introduction

On October 13, 2025, Governor Gavin Newsom’s office published its list of signed and vetoed bills from the 2025 legislative session. The governor took an unexpectedly fiscally conservative approach to the bills he signed into law, vetoing many bills that included proposed funding for climate and environmental programs, despite overwhelming bipartisan support across the state legislature. 

Newsom vetoes $50 million carbon removal funding program

Governor Newsom vetoed what would have been the largest state-level CDR procurement program in the US. SB 643 would have established the Carbon Dioxide Removal Purchase Program. Managed by the California Air Resources Board (CARB), this program would have provided $50 million in competitive grants for eligible CDR projects operating in California between July 2026 and December 2035.

In his veto letter, Governor Newsom acknowledged that the deployment of CDR technologies is “increasingly necessary” to achieve California’s target of net zero greenhouse gas emissions by 2045. This target was established by the California Climate Crisis Act (AB 1279) in 2022. 

What this means for the carbon removal market

The CDR community was eagerly anticipating the enactment of SB 643 following its passage with majority support in both the State Senate and Assembly. 

The veto represents a missed opportunity for scaling CDR in California. The bill would have incentivized private capital investment through a private-public funding matching requirement, where eligible projects would need to secure equal or greater third-party funding to qualify for state grants. 

However, the veto of SB 643 does not signal a broader rollback in support for climate and carbon management policy in California.

Enacted legislation provides continued climate action

In his veto reasoning, Governor Newsom described the efforts in SB 643 as “duplicative” to two newly enacted policies in the 2025 legislative session: 

• Senate Bill 840 (SB 840) provides “a continuous appropriation from the Greenhouse Gas Reduction Fund of $85 million per year for climate-focused innovation that may include CDR technologies.” 

• Assembly Bill 1207 (AB 1207) renamed California’s existing market-based compliance mechanism from “Cap-and-Trade” to “Cap-and-Invest” and extended the operation of this program to January 1, 2046. Funds generated by the Cap-and-Invest Program will be deposited into the Greenhouse Gas Reduction Fund (GGRF). 

While these two pieces of signed legislation are important developments, they differ from SB 643 in a significant way: SB 643 would have specifically targeted CDR deployment with dedicated funding and a private-sector matching requirement to accelerate investment. In contrast, SB 840's $85 million annual appropriation covers broader climate innovation, where CDR technologies may compete with other technologies for funding overall.

Nonetheless, both SB 840 and AB 1207 will provide additional support in scaling CDR capacity in California through 2046, reflecting California’s sustained engagement on key climate action

California's climate policy landscape remains strong

Beyond CDR-specific legislation, California passed numerous other climate and environmental policies during the 2025 legislative session. 

For a detailed summary on the environmental and climate policies enacted or vetoed during this session, check out Carbon Direct’s 2025 California Legislative Digest.