Background
On September 19, 2025, Governor Newsom signed into law Senate Bill 840 (SB 840, Limón, statutes of 2025) and Assembly Bill 1207 (AB 1207, Irwin, statutes of 2025), both of which were passed by a supermajority in the Legislature. AB 1207 extends the program previously known as the Cap-and-Trade Program through 2045, providing investment and regulatory certainty for clean energy and technology, uplifting affordability for Californians, and giving additional direction to CARB. Now that the new legislation is law, CARB is proposing to amend the Regulation to reflect the direction and process in AB 1207. This work builds on the public process to update the Regulation that CARB started in 2023.
CARB first formally adopted the Cap-and-Trade Regulation in October 2011. The Cap-and-Trade Regulation establishes a declining limit on major sources of GHG emissions throughout California, and it creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. The Regulation is one of the measures adopted by CARB, pursuant to Health and Safety Code Sections 38500-38599 (AB 32) to reduce California’s greenhouse gas emissions and advance the State’s climate goals. It complements other measures to ensure that California cost-effectively meets its goals for GHG emissions reductions. The Board subsequently amended the Regulation in June 2012, October 2013, April 2014, September 2014, June 2015, July 2017, March 2018, and December 2018. The California Cap-and-Invest Program and Québec Cap-and-Trade System have participated in a linked carbon market since January 2014. In 2017, AB 398 was passed by a supermajority in the Legislature and included prescriptive direction on the design of the program from 2021 through 2030.
The suite of Proposed Amendments to the Cap-and-Trade Regulation work collectively to ensure the Program provides the long-term price signal, appropriate incentives, and regulatory certainty to support the economy-wide deep decarbonization needed through mid-century.
The Notice, ISOR, and all subsequent regulatory documents are available on CARB's Rulemaking webpage.
Written Comment Period & Comment Submittal
In accordance with the Administrative Procedure Act, interested members of the public may present comments orally or in writing at the hearing and may provide comments by postal mail or by electronic submittal before the hearing. The public comment period for this regulatory action will begin on January 23, 2026. Written comments not physically submitted at the hearing must be submitted on or after January 23, 2026, and received no later than March 9, 2026, and addressed to one of the following:
Clerk of the Board, California Air Resources Board
1001 I Street, Sacramento, California 95814
Please note that under the California Public Records Act (Government Code section 7920 et seq.), your written and oral comments, attachments, and associated contact information (e.g., your address, phone, email, etc.) become part of the public record and can be released to the public upon request.
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