This article was originally published by cCarbon on June 1, 2026 and is reprinted here with permission.
After 18 hours of testimony and deliberation over two days last week, the CARB Board voted on Friday to pass the staff presented Cap-and-Invest amendment regulatory package (important MRR changes came along for the ride). The actual amendments were passed without changes, i.e. there won’t be another amendment package, and therefore the regulatory process can stay on track for a September 1st implementation. That being said, it was not a remotely straightforward vote. The Adopting Resolution was amended several times on the fly, with significant implications to staff’s signature new policy innovation. It was as non-typical a CARB Board Meeting as I can remember in almost 25 years of tracking this agency.
In the end, CARB will move forward with these Program updates, but not without some important lessons learned that we can reflect on here. Let’s go through some of the takeaways from the entire process, which remarkably started two years ago.
You couldn’t watch the staff presentation and not come away with the sense that the post-2030 rulemaking won’t be any easier. It is clearly a zero-sum equation at this point. Giving value to one entity (industry, utility ratepayers, or GGRF recipients) just takes it from the other(s). Gone are the days when all sides could be pacified.
The connection between the Program’s emission reduction goals, and it secondary benefit of revenue was on full display. Legislators weighed in both in support and opposition to the staff proposal.
The questions about impacts to the State Budget were central to the debate over what was proposed and what to do. There will most likely be a legislative budget response to the amendments being approved, and those choices will be just as scrutinized.
With Linkage and Post-2030 program detail decisions still in front of everyone, the regulatory clock is ticking faster than before. It was stated several times by staff that the regulation had been amended eight times since its inception, but the last one was seven years ago. The next two, Linkage and Post-2030, will come almost back-to-back-to-back with this one. Squeeze in a Scoping Plan update and you can see the we won’t get the opportunity for seven more years of stability.
There was actually a lot of details in the package presented to the Board for approval, including post-2030 caps, missing/removed post-2030 industry and utility allocation details, corporate association provisions, weedy offset provisions, modernization of the rules to keep up with stakeholder actions like biorefinery conversions, and much more. But the stakeholder comments and Board debate centered on one or two issues, depending on your viewpoint of how they were related. The first was the Manufacturing Decarbonization Incentive, or MDI. The second was its impact on the programs revenue potential to the Greenhouse Gas Reduction Fund, or GGRF. My non-AI estimate is that 98%+ of the discussion over the two days related to those two highly charged topics.
This isn’t the first time the debate ratio got skewed. Way back when Cap-and-Trade was first adopted, the majority of stakeholder comments focused on the Forestry Protocol. This narrow focus, on a defensible policy issue has served CARB well in the past. This time the debate was about the Shiny New Object, giving the rest of the details a pass. Last time, staff was able to defend the Forestry Protocol without much harm to it. This time the Shiny New Object of controversy was MDI, which didn’t fare as well.
Several Board members were clearly not on the same page as the staff proposal with respect to MDI. Mainly, but not all the concerns came from the EJ-focused members. MDI was essentially put on ‘pause’ as staff was directed to not issue MDI allowances until staff comes back to the Board to report on applications received. It isn’t exactly clear what the MDI process will actually look like, but it won’t be the relatively straightforward regulatory language in the Package.
On the impacts to the GGRF, there really wasn’t much the Board could do. Protecting against leakage and electricity ratepayer impacts came at a cost to the GGRF. As the allocations were approved as proposed, the GGRF impact was not changed, in spite of the impassioned stakeholder testimony.
There were more Board Members who’s first CARB meeting was this calendar year (Santiago, Limon, Silva, and Stigler Granados), than members who had been through a Cap-and-Trade vote before (Balmes, Eisenhut, and Takvorian). That is a tough spot to put anybody in. Therefore everyone was impacted—staff, stakeholders, the Chair, and the Board Members themselves. There were many questions fielded by CARB staff about just how things actually work, both on the programmatic side, and on the process of adopting/amending/implementing regulations. This led to a much slower and a more circular discussion that took away from the policy debate that has historically been seen at these meetings. It just didn’t have a flow to it that we have seen in the past, or the ability for staff to really defend the new proposal.
In addition, the CARB Board displayed more skepticism of staff’s proposal than in the past. Board discussion careened from MDI to Budget to Transit to Housing but rarely to the core adoption of the post-2030 cap changes. Having little room to maneuver was brought up several times as a sore point by Board Members. Feeling the weight, or perceived weight, of state budget decisions related to the GGRF impacts only added to the intensity of the debate.
In the end, the CARB Board supported the Program and the continuation of a decades-old market idea and providing some near-term market stability. However, there was real pushback on the process from lengthy delays, to fast-approaching deadlines. Academics could teach a class on this regulatory cycle, as it had it all—policy, politics, process, personalities, pushback and promotion. It would be nice to say the hard part is done, but last week is just the latest in what is surely going to be a series of big mile markers with California’s signature climate program.
This article has been written by Jon Costantino, an Advisor for cCarbon.info. Jon is Founding Principal at Tradesman Advisors, and a former CARB Climate Change Planning Manager. This piece aims to summarize key learnings from the May ’26 Board Meeting. cCarbon’s take on the meeting is available here.