California Lawmakers Urge CARB to Reconsider Cap-and-Invest Amendments
As part of our conference conversations, VX News shares a letter dated April 27, 2026, from California lawmakers urging the California Air Resources Board (CARB) to reconsider proposed amendments to the Cap-and-Invest program. The letter warns the changes could weaken emissions targets, inject new allowances into the market, and undermine both price signals and long-term climate investment—raising broader concerns about affordability, accountability, and the pace of the energy transition.
From April 27, 2026 Letter:
Dear Chair Sanchez,
California is the last great hope for stability and progress for climate and energy security. But threats, both foreign and domestic, are destabilizing markets and burdening working families with ever more costly energy bills and climate disasters.
We urge the California Air Resources Board to amend their Cap-and-Invest proposal to push back on pressure from an oil industry that is making hundreds of billions in wartime profits.
The recently proposed amendments put both our 2030 targets and the stability of the Greenhouse Gas Reduction Fund at risk. They also depart from the spirit of our landmark agreement from last year by seeking to achieve affordability goals without accountability.
CARB’s proposal, rather than adhere to the will of the Legislature and clear statutory direction, adds up to 118 million metric tons of allowances back into the market, providing at least $3.5 billion in subsidies that will only prolong our reliance on fossil fuels and their disproportionate impacts on public health in environmental justice communities. This contradicts CARB’s Initial Statement of Reasons about what was required for California to reach our 2030 emissions target. It also effectively zeroes out future Greenhouse Gas Reduction Fund investments.
In addition to diluting the market signal of the cap—increasing emissions and reducing demand for allowances—the proposed Manufacturing Decarbonization Incentive (MDI) under the newly created Build Up California Reserve lacks any enforceable mechanism to demonstrate real, permanent, quantifiable, and verifiable emissions reductions. The MDI resembles CARB’s existing offsets program, but without any of the accountability measures required by law.
Speeding progress towards the 2030 emissions target will allow us to accelerate investments to provide lasting relief for the pain at the pump families are struggling to shoulder. Instead, this proposal entrusts the very oil industry that is profiteering from President Trump’s war to somehow deliver savings to the California drivers they are holding over a barrel [1].
The Legislature worked for more than a year to reform and reauthorize the program. We did so well in advance of the program’s sunset to provide certainty to regulated industries, to stabilize the market for allowances, and to send a clear signal that California is committed to the energy transition. The law reflects a hard-fought compromise, and a deliberate balance between ambition and affordability.
AB 1207 reaffirmed our statutory commitment under SB 32 (Pavley, 2016) to achieve “at least 40 percent” below 1990 levels by 2030. This clear commitment includes unambiguous direction “to achieve the maximum technologically feasible reductions in greenhouse emission to achieve the requirements” of our 2030 and 2045 targets (Cal. Health & Safety Code §38566 and §38562.2).
These are not optional suggestions: these targets are “requirements” that must be “achieved.”
Based on these 2030 and 2045 commitments, SB 840 established clear expectations for ongoing revenues to support investments in vital public services and infrastructure that our communities are counting on.
Cementing reliance on fossil fuels through costly, inefficient subsidies is not an affordability strategy and will not prevent the next gas price spike. Investments in electric vehicles, transit, livable communities, and innovation to help lower technology costs for working families will immunize us from the oil wars of the future, while creating jobs here at home. Moreover, the proposal also lacks any assurance that CARB, the Energy Commission or the Division of Petroleum Market Oversight will have the data or accountability tools they need to avoid saddling California taxpayers with further costs like the federal government’s “petroleum exclusion,” which shields refineries from Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) cleanup liability [2].
There are better options available to stabilize in-state fuel supply through the energy transition that preserve the integrity of California’s carbon market. We anticipate many such solutions will be highlighted in the Transportation Fuels Transition Plan and Transportation Fuels Assessment, due this month, and we are ready to engage with the Administration and industry to build on our work.
CARB must stay on course in this rulemaking to meet the 2030 targets while doing the following:
1. Apply the same rigor and accountability to any compliance instruments generated under the MDI program as we do for offsets—namely, that they be real, permanent, quantifiable, verifiable and additional emissions reductions—there must be accountability on public spending and environmental justice.
2. Provide clarity that the 2030 target remains in force, and that the MDI program not be permitted to expand the emissions cap, including by limiting the total quantity of MDI-related instruments and requiring a commensurate adjustment to the allowance budget.
We understand the Board seeks to act on this rulemaking in the coming weeks. We expect CARB will stay on track with program amendments that adhere to both the spirit and letter of the law by making appropriate revisions to ensure California does not backslide on its climate goals.
Sincerly,
Henry Stern — Senator, 27th District
Damon Connolly — Assemblymember, 12th District
Josh Becker — Senator, 13th District
Rick Chavez Zbur — Assemblymember, 51st District
Isaac Bryan — Assemblymember, 55th District
Robert Garcia — Assemblymember, 50th District
Ben Allen — Senator, 24th District
Alex Lee — Assemblymember, 24th District
Gail Pellerin — Assemblymember, 28th District
Sade Elhawary — Assemblymember, 57th District
Gregg Hart — Assemblymember, 37th District
Ash Kalra — Assemblymember, 25th District
Chris Ward — Assemblymember, 78th District
Chris Rogers — Assemblymember, 2nd District
Scott Wiener — Senator, 11th District
Nick Schultz — Assemblymember, 44th District
Lena Gonzalez — Senator, 33rd District
Dawn Addis — Assemblymember, 30th District
Jesse Arreguín — Senator, 7th District
Marc Berman — Assemblymember, 23rd District
Rebecca Bauer-Kahan — Assemblymember, 16th District
John Harabedian — Assemblymember, 41st District
Tasha Boerner — Assemblymember, 77th District
Steve Bennett — Assemblymember, 38th District
Jessica Caloza — Assemblymember, 52nd District
Mia Bonta — Assemblymember, 18th District
John Laird — Senator, 17th District
Catherine Blakespear — Senator, 38th District
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[1] Damian Carrington, “Big Oil Reaping Huge War Windfall From Consumers, Analysis Finds” The Guardian (April 15, 2026), available at: https://www.theguardian.com/environment/2026/apr/15/big-oil-huge-war-windfall-consumers. [2] 42 U.S.C. § 9601(14); see also, Ann Alexander, Before the Last Drop: Lessons From The Phillips 66 Los Angeles Refinery Closure (2025).
