45 Organizations Urge State Leaders to Ensure Cap-And-Invest Delivers Household Cost Relief and Climate Investments—Not Industry Subsidies

For Immediate Release: May 4, 2026
Contact: Tyler Bushnell, tyler.bushnell@nextgenpolicy.org

Sacramento, CA — Today, a coalition of 45 organizations across the state submitted a sign-on letter to Governor Gavin Newsom and the California Air Resources Board (CARB) in response to the latest proposed Cap-and-Invest program amendments. The letter urges CARB to protect Californians from a proposed program amendment that would undermine the integrity of the program’s cap on emissions and pay out billions in benefits from the state’s Cap-and-Invest program to polluters instead of critical public relief programs and solutions to cut climate pollution.

“At a time when Californians are facing high gas prices and oil companies are receiving record profits, the answer isn’t more handouts,” said Chloe Ames, Policy Advisor at NextGen California. “The Cap-and-Invest program works because it places a strict cap on our emissions and requires polluters to pay. We can’t afford to emit above this cap and issue more free giveaways to our state's biggest polluters.”

The program is one of California’s most important pollution and affordability tools, generating billions of dollars for wildfire prevention, cleaner air, energy bill relief, and programs that help households transition to clean technologies. However, the proposed program mechanism, the Manufacturing Decarbonization Incentive (MDI), would flip the program’s core principle on its head by handing out more industry subsidies while risking critical emissions reductions.

The coalition warns that the proposed MDI is a handout to industry that could significantly increase the state’s pollution by adding 118 million additional allowances to the market on top of the emissions cap. This proposed mechanism is expected to reward polluting industries with as much as $3.5 billion in subsidies while reducing funding for programs that benefit everyday Californians. The program has successfully generated $34 billion for more than 500,000 public projects over the last decade.

"Absent a real cap to permanently limit and reduce pollution over time, Cap-and-Invest won’t work or meet requirements outlined in state law to meet California's emissions reduction goals for 2030. CARB must fix this framework now, so the Board can pass a credible update to Cap-and-Invest to be implemented in September," said Katelyn Roedner Sutter, Senior California Director at Environmental Defense Fund. "Without a real pollution cap to help achieve our climate goals, we aren’t showing the world it can continue looking to California for credible leadership when it can no longer look to Washington, DC."

To protect the program and ensure it continues delivering for Californians, the coalition’s letter outlines a common-sense correction for state leaders: remove the Manufacturing Decarbonization Incentive right away, so CARB can implement a much stronger program regulation this fall. The removal of the latest MDI proposal is critical to uphold the integrity of the cap on climate pollution and protect affordability benefits for California families by maintaining a strong allowance market. Otherwise, the state risks not meeting California’s 2030 climate targets and missing opportunities to support household electricity bill relief.

Advocates emphasize that the Cap-and-Invest program was designed to cut pollution while protecting consumers and investing in communities, and warn that the latest changes—driven by expanded industry incentives—would undermine those goals. They caution that increasing subsidies for polluting industries would jeopardize California’s ability to meet its 2030 climate pollution reduction targets and represent a major, last-minute shift in the Cap-and-Invest program that was not adequately introduced or vetted through the public rulemaking process.

“Every dollar to oil is a dollar taken from cleaner air, wildfire prevention, energy bill relief, and programs that help Californians upgrade to clean technologies,” said Kjellen Belcher, senior research and policy analyst at Earthjustice. “No Californian should be forced to pay for Big Oil’s pollution because of an eleventh-hour change that benefits industry and cuts out the public.  California law requires more public scrutiny.”

The letter concludes, “The revisions we are requesting are the minimum necessary to ensure this program does what the Legislature directed it to do: deliver cost-effective emissions reductions aligned with California’s climate targets and protect and strengthen affordability benefits for California families. CARB has the ability and the time to make these surgical changes before issuing a final regulation for a Board vote, without delaying the implementation of rule updates this fall.”

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