SB 1216 is a budget trailer bill that would make adjustments to the Greenhouse Gas Reduction Fund allocation and the California Air Resources Board’s implementation of the newly adopted Manufacturing Decarbonization Incentive, both aspects of the Cap and Invest program.
California’s signature climate program, Cap and Invest, was reauthorized and reformed by the legislature last year 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).
These new giveaways could result in $2 billion less to invest in public transit, safe drinking water, clean air, affordable housing, and farmland conservation through the GGRF.
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. SB 1216 will protect crucial GGRF allocations, ensuring essential climate programs remain fully funded.
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