CARB advances cap-and-invest overhaul with $10 billion bill-credit shift, industrial fund

The California Air Resources Board on May 28 advanced a major rewrite of its cap-and-invest program, with staff outlining changes that would extend the market through 2045, redirect more allowance value toward household bill relief and create a new industrial decarbonization incentive.

At the Sacramento hearing, staff said the proposal would implement AB 1207 and SB 840 by aligning cap-and-invest rules with the state’s 2045 climate target. The staff presentation said the package would direct roughly $10 billion to the California Climate Credit for electricity customers from 2027 through 2030, transfer 70% of gas utility allowances to electric utilities by 2031, and create a $4 billion Manufacturing Decarbonization Incentive allocation for industrial projects.

Staff also said the proposal would remove 118 million allowances through 2030 and another 900 million after 2030, while providing about $800 million in additional industrial compliance support. The hearing materials said the changes would be part of a broader effort to balance affordability, market certainty and emissions-reduction goals under the program’s 2045 extension.

The board also heard amendments to the state’s mandatory greenhouse gas reporting rule. Staff said those revisions would update reporting requirements for sectors including electricity, fuels and industry, and would add coverage for technologies such as battery storage, hydrogen, biofuels and carbon capture and storage.

Public comment focused on what the overhaul could mean for the Greenhouse Gas Reduction Fund and community programs such as AB 617 air-quality work. Air district officials warned that lower auction revenue could threaten local air projects and community emission reduction plans, while utilities and industry representatives generally backed the framework as a way to preserve affordability and provide more long-term certainty.

The transcript excerpt shows staff recommending approval of the amendments and moving into public comment, but it does not show a final board vote or whether the package was adopted unchanged.