The California Air Resources Board (CARB) updated its Cap-and-Invest Program (formerly known as Cap-and-Trade) last week. CARB asserts that the changes ensure that California maintains its path toward meeting its 2030 and 2045 climate targets while also supporting affordability for Californians, long-term investment in clean energy in the state, and helping industry by providing compliance support.
Photo Credit: CARB
The changes were made in response to economic impacts, volatile market conditions, global events, and federal disruption of incentives. As a result, CARB says these changes will maintain "environmental ambition" as well as easing financial pressures and helping to avoid additional costs for consumers.Said CARB Chair Lauren Sanchez,
“At a moment when climate policy is under attack and global economic upheaval is creating real uncertainty, this rulemaking is critically important for California. California has both an opportunity and a responsibility to lead with consistency. By moving forward today, we are responding to real affordability concerns while sending a clear and unwavering signal to the world that we remain committed to long-term investment in clean energy, good jobs, and healthier communities.”
Here are some key points from the adopted changes:
- Establishes more stringent allowance budgets to align with the 2030 and 2045 climate targets: Guarantees the removal of 118 million allowances from allowance budgets, resulting in an 11% cap decline year-over-year for this decade and an average of 7% from 2031 to 2045.
- Dedicates 80% of allowances to directly benefit Californians: Provides $10 billion for electricity bill credits and maintains an estimated $8 billion for the Greenhouse Gas Reduction Fund.
- Stronger support for California businesses and jobs: Doubles the Manufacturing Decarbonization Incentive Fund to $4 billion to support investment in California and help make up for the loss of federal incentives. Eligible entities include manufacturers – food processors, cement plants, and refiners, who make large investment upgrades that reduce emissions at their facilities and reduce future compliance costs.
- $800 million in added compliance support for industry: Enhances near-term stability, supports California businesses and jobs, and ensures no additional cost passthrough at the pump for consumers.
