{"id":675244,"date":"2026-05-31T02:57:15","date_gmt":"2026-05-31T02:57:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/675244\/"},"modified":"2026-05-31T02:57:15","modified_gmt":"2026-05-31T02:57:15","slug":"amid-opposition-california-regulators-approve-major-changes-to-cap-and-trade-program","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/675244\/","title":{"rendered":"Amid Opposition, California Regulators Approve Major Changes To Cap-And-Trade Program"},"content":{"rendered":"

\u201cCalifornia\u2019s nation-leading cap-and-invest program has proven that we can cut pollution, create jobs, and invest in a cleaner future at the same time,\u201d he wrote. \u201cThese are real results that Californians can see and feel.\u201d<\/p>\n

Regulators said they were doing their best to strike a balance that also keeps oil and gas companies viable.<\/p>\n

\u201cThere is no direction to us, as an agency, to maximize one trade-off versus another,\u201d said Rajinder Sahota, deputy executive officer for climate change and research at CARB. \u201cWhat we\u2019re trying to do is balance all of the pieces that we\u2019re getting.\u201d<\/p>\n

\"\"A sign for a petroleum pipeline in Richmond on Aug. 8, 2025. (Martin do Nascimento\/KQED)<\/p>\n

The vote comes months after the board faced pressure from the oil and gas industry, which warned that compliance with current rules would drive them out of California and increase energy prices. The war in Iran has sent gas prices soaring to over $6 a gallon<\/a> in California and in the past six months, two refineries<\/a> have closed.<\/p>\n

Meanwhile, climate, housing and transit advocates argued they also face an uncertain future with cuts from the federal government<\/a> and tightening state budgets<\/a>.<\/p>\n

Adam Smith, with Southern California Edison, told regulators the proposal was the \u201cmost direct and substantial affordability action for electric customers this year and likely for years to come.\u201d<\/p>\n

\u201cWe think the overall proposal strikes the right balance between affordability and stringency to keep us on track for our shared climate goals,\u201d he said.<\/p>\n

California\u2019s cap-and-invest<\/a> program currently works similar to a carbon tax: It sets a cap on the amount of greenhouse gases oil refineries, steel and paper factories, cement plants and other big polluters are allowed to emit. Every year, the cap lowers, helping the state meet its ambitious goal to reduce greenhouse gas emissions by 40% below 1990 levels by 2030 and 85% below 1990 levels<\/a> by 2045.<\/p>\n

Regulators issue credits, or allowances, to companies for every ton of greenhouse gases they emit. Allowances are then sold to companies at auctions held four times a year.<\/p>\n

The revenue generated from those auctions goes into California\u2019s Greenhouse Gas Reduction Fund (GGRF), which has collected more than $31 billion since its first auction in 2013.<\/p>\n

In January, CARB proposed dramatically lowering the number of allowances so the state could stay on track to meet its climate goals by 2030. Fewer allowances would have theoretically resulted in higher prices at auctions and potentially more money for the GGRF.<\/p>\n

But leaders from the oil and gas industry pushed back on that proposal, warning that cutting too much, too quickly would lead to higher prices for consumers, especially at a time of market volatility.<\/p>\n

\"\"Contra Costa County Fire Department firefighters outside the Martinez Refining Company as smoke billows from the refinery on Feb. 2, 2025 in Martinez. (Courtesy of Contra Costa County Fire Department)<\/p>\n

In April, regulators returned with a new proposal to create a first-of-its kind program called the Manufacturing Decarbonization Incentive <\/a>(MDI), which would offer back those allowances if the polluting companies invest in decarbonization projects, such as replacing fossil-fuel powered equipment with clean alternatives, working on carbon sequestration, methane reduction, and other projects.<\/p>\n

But climate, affordable housing and transit advocates are skeptical as to whether those projects will truly materialize. They also worry that this new program could lower the value of allowances at auction, potentially resulting in less money for GGRF programs.<\/p>\n

While the state\u2019s high-speed rail program is the largest recipient of the current GGRF funds, 20% goes towards the Affordable Housing and Sustainable Communities (AHSC) program, which provides grants and loans for affordable housing projects near public transit.<\/p>\n

During Thursday\u2019s public comment period, which lasted eight hours, Natalie Spivak, an advocate with nonprofit Housing California, pointed out that the program is the state\u2019s largest ongoing source of funding for affordable housing.<\/p>\n

\u201cAHSC has an incredible track record of producing over 22,000 affordable homes<\/a>, creating jobs, and reducing greenhouse gas emissions,\u201d she said. \u201cIncreasing allowances to oil and gas companies without any guarantee that consumer prices will fall is not the way to create affordability.\u201d<\/p>\n

Transit agencies voiced concerns, too. Fifteen percent of the GGRF goes towards a variety of public transit programs and agencies. According to officials from the San Francisco Municipal Transit Agency, it has received more than $600 million in cap-and-invest funding since 2015. That has gone into replacing light rail vehicles and improving transit service.<\/p>\n

Beverly Greene, chief government affairs officer for the Santa Clara Valley Transportation Authority said the change could eliminate funding to support construction of the BART Silicon Valley extension project<\/a>.<\/p>\n

\u201cWe respectfully urge you to oppose the proposed program changes and instead protect the Greenhouse Gas Reduction Fund programs,\u201d she said at the meeting.<\/p>\n

But regulators pushed back, arguing that the new decarbonization program might not dramatically lower funds for the GGRF. They also argued that the legislature controls where those GGRF funds go, not them.<\/p>\n

\"\"An excavator operator moves material during early work on VTA\u2019s BART to Silicon Valley Phase II Extension project at the West Portal construction site in San Jos\u00e9 on June 23, 2025. (Joseph Geha\/KQED)<\/p>\n

\u201cNothing that we\u2019re doing here is setting the priority for how the legislature may decide to appropriate funds,\u201d Sahota said.<\/p>\n

Before voting on the measure, CARB members agreed to include an amendment requiring a vote to review the decarbonization projects before the allowances are issued to companies. Another amendment directed CARB staff to talk to the governor\u2019s office about the importance of sustained funding for public transit and affordable housing programs.<\/p>\n

Still, many are concerned about what the vote could mean for the future of funding for affordable housing, climate programs and transportation. Following the vote, San Francisco Mayor Daniel Lurie urged the board to reconsider.<\/p>\n

\u201cThis decision puts our efforts to save transit, build affordable housing and drive our economic recovery at risk,\u201d he said in an emailed statement. \u201cSince that work helps achieve our emissions goals, those goals will be jeopardized too.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cCalifornia\u2019s nation-leading cap-and-invest program has proven that we can cut pollution, create jobs, and invest in a cleaner…\n","protected":false},"author":2,"featured_media":675245,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[192,79],"class_list":["post-675244","post","type-post","status-publish","format-standard","has-post-thumbnail","category-environment","tag-environment","tag-science"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/675244","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=675244"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/675244\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/675245"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=675244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=675244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=675244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}