CARB adopts changes to Cap-and-Invest Program to benefit consumers and business

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.

For more information on this program: Cap-and-Invest Program

New California Corporate GHG and Financial Risk Reporting Workshop

The California Air Resources Board (CARB) will be holding a virtual public workshop on California's new Greenhouse Gas and Financial Risk reporting programs on Tuesday, November 18, 2025, at 9:30 AM - 12:30 PM PST.

Photo credit: CARB

CARB will be providing updates on rule development for the new programs, which were authorized by state legislation in 2023 and 2024.

In short, certain companies that do business in California will be required to report their Scope 1, 2, and 3 greenhouse gas (GHG) emissions for the prior fiscal year. Additionally, companies will be required to publish biennial climate-related financial risk reports.

The GHG reports apply to companies with total annual revenues in excess of one billion dollars ($1,000,000,000). The financial risk reporting will apply to companies with annual revenues of at least $500 million.

Scope 1 and 2 reports are due on an as yet unspecified date in 2026. The first financial risk reports are due on January 1. 2026. The due date for Scope 3 emissions has not yet been specified.

The definitions of Scope 1, 2, and 3 emissions are:

Stationary Combustion (Scope 1): Emissions from combustion of fuels in stationary sources for generation of electricity, heat, or steam, e.g., boilders, furnaces, turbines.

Mobile Combustion (Scope 1): Emissions from the combustion of fuels in company owned/controleed mobile combustion sources, e.g., trucks, ships, airplanes, and cars.

Process Emissions (Scope 1): Emissions from manufacture or processing of chemicals and materials, e.g., cement, aluminum, and waste processing.

Fugitive Emissions (Scope 1): Emissions from intentional or unintentional releases, e.g., equipment leaks from joints, seals, or packing; methane emissions from coal mines and venting.

Location-based Method (Scope 2): This method reflects the average emissions intensity of grids on which energy consumption occurs (using grid-average emission factor data).

Market-based Method (Scope 2): This method reflects emissions from electricity that companies have purposefully chosen (using emission factor derived from contractual instruments).

Business related emissions from non-company sources (Scope 3): These include all business related emissions that are not Scope 1 or 2. These are emissions from related business organizations that are not directly owned or controlled by the reporting company. They include supply chain, transportation, product usage, business travel, purchased goods, waste generated, and the use of sold products. Sometimes referred to as value chain emissions, they are very difficult to calculate and, perhaps even moreso, to reduce.

Anyone in the public may participate in this virtual workshop by registering at this link: CARB Workshop Registration