Sacramento, CA — Environmental justice (EJ) organizations across California are expressing major concerns for the new proposed changes to the Cap and Invest program, which would provide significant giveaways to polluting industries at the cost of Californians’ health and critical equity programs.
At a critical moment for California’s climate leadership, EJ leaders emphasized that communities on the frontlines of pollution cannot afford a rollback of one of the state’s primary climate and investment tools.
CARB’s proposal, rather than aligning with legislative intent and statutory mandates under AB 32 and subsequent reauthorization statutes, would inject up to 118 million metric tons of allowances back into the market, effectively providing at least $3.5 billion in subsidies to covered entities. This approach prolongs reliance on fossil fuels, exacerbates cumulative pollution burdens, and undermines public health protections in EJ communities. It directly contradicts CARB’s Initial Statement of Reasons regarding the level of stringency required to meet California’s 2030 emissions target and risks significantly reducing future Greenhouse Gas Reduction Fund (GGRF) dedicated revenue to critical programs that fund affordable housing, clean transit and transportation, clean water, and clean air.
In addition to weakening the cap and reducing demand for allowances, the proposed Manufacturing Decarbonization Incentive (MDI) and Build Up California Reserve lack enforceable safeguards to ensure emissions reductions are real, permanent, quantifiable, and verifiable, as required under existing regulatory standards. The MDI structure mirrors key deficiencies of the offsets program, while failing to include the statutory accountability, monitoring, and verification requirements necessary to protect environmental integrity and prevent harm to frontline communities.
We have reviewed the proposed 15-Day Changes released on April 14, 2026, and urge the Board to reject staff’s current proposals. Californians demand and deserve a more ambitious program.
As stated in prior comments, which were re-submitted today, May 4, the current trajectory risks weakening both the environmental integrity of the program and the investments Californians rely on for affordability, public health, and climate resilience. We urge CARB to:
Increase program stringency: Ensure real, enforceable emissions reductions at the source, especially in overburdened communities.
Reduce leakage assistance to the oil and gas industry: End excessive giveaways that prioritize industry profits over community health and climate progress.
Eliminate the Manufacturing Decarbonization Incentive and Build Up California Fund: Stop subsidizing polluters and redirect resources to solutions that deliver real community benefits.
Increase allowances to electric utilities for the California Climate Credit: Provide direct, equitable financial relief to ratepayers, prioritizing low-income households and those most impacted by energy costs.
Prioritize the Greenhouse Gas Reduction Fund: Fund equity programs that provide real benefits to communities instead of subsidizing polluting industries, which will not provide benefits to Californians.
"While Big Oil rakes in record profits from the war on Iran, California is being asked to hand them yet another multibillion-dollar subsidy through more free pollution allowances and a weakened cap. CARB's proposed carbon scheme goes beyond enabling oil refiners to pollute for free — it pays them for every ton of climate-warming gases they pump into our air,” said Faraz Rizvi with the Asian Pacific Environmental Network (APEN). “For families living in the shadow of the state's refineries who are already breathing refinery pollution every day, this isn't an abstract policy change — this means more asthma attacks, cancer risk, and shortened lives. California cannot afford to sacrifice our climate progress and community health for industry profits."
The proposed changes to the program risk undermining California’s ability to meet its 2030 climate targets, while diverting billions of dollars away from critical investments such as utility bill relief, clean transportation, safe drinking water, and wildfire prevention. These investments are essential for addressing affordability and environmental burdens in low-income communities and communities of color.
EJ advocates warn that weakening the program would not only delay emissions reductions but also deepen inequities by allowing continued pollution in already overburdened neighborhoods.
EJ leaders also underscored that this moment represents a broader test of California’s commitment to a managed and equitable transition away from fossil fuels. Efforts to introduce additional subsidies, expand loopholes, or weaken the pollution cap threaten both climate progress and public trust.
"Pollution overburdened communities like mine in Lamont, CA, deserve to see the benefits of the state's Cap-and-Invest program with meaningful investments that reach the ultimate goal of emissions reductions and healthy neighborhoods. CARB should prioritize our health over extending the life cycle and profits of polluting industries. This is long overdue," said Diana Mireles, President, Comité Progreso de Lamont.
“CARB’s proposal will set us back on our climate goals at a time when we need to be moving forward,” says Lauren Gallagher, Associate Attorney at Communities for a Better Environment (CBE). “Frontline communities will continue to suffer the health and financial impacts of hazardous air pollution and climate change, including worsening wildfires, extreme heat and floods while CARB redirects billions towards industry and away from electricity bill relief and investment in programs for cleaner air and water, transit, and affordable housing.”
“Environmental justice communities have been clear: Cap-and-Invest must cut pollution at the source, protect public health, and invest in those most harmed,” said Nile Malloy of the California Environmental Justice Alliance (CEJA). “CARB’s proposal does the opposite—handing billions to polluters, undermining 2030 climate targets, and putting affordability and community investments at risk. Frontline communities cannot afford more delay or dilution. CARB must strengthen the program and hold polluters accountable.”
“Communities in the San Joaquin Valley know too well the impacts of biomass derived from dairy digesters,” said Vivyana Prado from Leadership Counsel for Justice and Accountability (LCJA). “Biomass continues to be sold as an emission reduction fuel at the cost of the health of residents who live near large dairies. Residents' access to safe drinking water and livable communities is compromised. The 15-day changes to the regulation allow for entities within the cap to double-count emission reductions in C&I and other emissions reduction programs, such as the Low Carbon Fuel Standard. How is the program truly going to reduce GHGs if the entities have multiple pathways for relief to not comply with the cap?”
EJ groups reaffirm their commitment to working with lawmakers and state agencies to ensure that Cap-and-Invest delivers on its promise: cleaner air, healthier communities, and a just transition for all Californians.
EJ organizations are not alone in their concerns. Twenty-eight state legislators call for CARB accountability on emissions reductions, public spending, and environmental justice.
See the full joint letter submitted to CARB here.
