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The California Air Resources Board (CARB or Board) will be submitting the final rulemaking documents for amendments to the Regulation for the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms (Cap-and-Invest Regulation, formerly Cap-and-Trade Regulation) to the Office of Administrative Law (OAL) on July 14, 2026. The Board approved the Proposed Amendments at the May 2026 Board Hearing.
Links to the final rulemaking documents, including the Final Statement of Reasons and regulatory text submitted for approval, will be available on the Cap-and-Invest Regulation Rulemaking webpage between 12 pm and 2 pm on July 14.
OAL has up to 30 business days from the submittal date to make a determination on the Cap-and-Invest Regulation rulemaking package. If OAL approves the rulemaking package and grants CARB’s requested effective date, the amended Cap-and-Invest Regulation will be effective on September 1, 2026.
The original Notice of Public Hearing, Initial Statement of Reasons, Final Environmental Impact Analysis, approved Board Resolution, and all other applicable regulatory documents are available on CARB’s Cap-and-Invest Regulation Rulemaking webpage.
Cap-and-Invest 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 updating 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. The previous public process materials are available at the Cap-and-Invest Program Meetings and Workshops webpage.
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 greenhouse gas (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 GHG 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.
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