National climate change policy faces the challenge of achieving deep emissions reductions while minimizing economic disruption. Since one of the principal aims of a cap-and-trade program is to lower the overall societal cost of environmental improvement, it is crucial to design a national carbon policy that taps the lowest-cost emission reductions available to the economy and avoids creating unnecessary costs. As a source of substantial low-cost carbon emission reductions, state clean energy policies should provide an essential foundation for an energy sector cap-and-trade program. This paper articulates the central role to be played by the state-level clean energy policies and the public utility commissions in the implementation of a cap-and-trade program. RAP provided policy support to NARUC’s Task Force on Climate Policy, and assisted in researching this policy brief.