Last year, the state legislature reauthorized and reformed California’s signature climate program, Cap and Invest, through 2045. The program sets a cap on the amount of greenhouse gas emissions allowed within the state, then allows companies to buy and sell permits (called “allowances”) to emit a specified amount of climate pollution. The revenue generated by Cap and Invest goes to the Greenhouse Gas Reduction Fund (GGRF), which supports clean transit, affordable housing, clean water, and clean air programs.
On May 29, 2026, the California Air Resources Board (CARB) approved changes to the Cap and Invest program that include billions of dollars in giveaways for Big Oil while cutting funding for the GGRF. The change gives oil companies access to a new subsidy, the Manufacturing Decarbonization Incentive (MDI), which could result in an additional $2 billion in giveaways to polluting corporations.
These new giveaways could result in billions of dollars less to invest in public transit, safe drinking water, clean air, affordable housing, and farmland conservation.
CARB’s recent decision jeopardizes our climate goals by reducing the ambition of the Cap and Invest program and by reducing (or eliminating) funding for critical climate investments. The California state legislature has the power to restore GGRF funding for climate programs, but they need to hear from you before these changes become final.
Update 9/14/2026: The California legislature did not remove the MDI subsidy before the close of the legislative session on August 31. We’re advocating for state lawmakers and our next governor to direct CARB to pause the MDI and require that companies demonstrate real emission reductions.