CARB Reauthorizes Flagship Climate Law
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The California Air Resources Board (CARB) updated California’s flagship climate law on May 29 and authorized the California Cap on Greenhouse Gas Emissions and Market-Based Compliance Mechanisms (commonly referred to as ‘Cap-and-Invest’). CARB’s action follows the Legislature’s passage of AB 1207 (Irwin) in 2025.
The updates to Cap-and-Invest (formerly Cap-and-Trade) authorize the program through 2045 and establish a steep decline in allowance budgets by mandating an 11 percent decline per year until 2030 to help meet California’s ambitious climate emissions targets.
Ag Council has food processing members who participate in Cap-and-Invest, and our association has engaged CARB throughout the rulemaking process and participated in a hearing in late May to provide comments. Membership and Public Policy Coordinator Jacob DeFant said, “CARB … presented a draft allowance budget through 2045 with a dramatically steep decline in allowances” and that “this aggressive decline will further drive-up costs for the food and agriculture sectors, threatening economic engines in the state, raising consumer costs, and increasing leakage risk” for ag processors and food producers.
Leakage is when entities leave the state to operate elsewhere and thereby shift emissions outside of California to areas without equivalent emissions standards.
To help address concerns regarding emissions leakage and the high cost of doing business in the state, CARB approved the inclusion of a Manufacturing Decarbonization Incentive Allocation (MDI). The MDI Allocation will provide participants in Cap-and-Invest with additional allowances to offset the cost of approved emission reduction projects for hard to decarbonize sectors like food processing.
CARB staff and board members will host additional workshops to refine the program and prepare for implementation which is expected to begin in the summer of 2027.
For more information on Cap-and-Invest click HERE.
Governor Announces $1B in EV Truck Rebates
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Governor Newsom recently announced applications are open for the new California Clean Fuel Reward (CCFR). The CCFR will provide $1 billion in rebates for customers who buy or lease new electric medium- and heavy-duty Class 2b – Class 8 vehicles for commercial use in California.
The CCFR program provides rebates at the time of sale ranging from $7,500 – $120,000 per purchase depending on the vehicle class. Governor Newsom said $250 million will be available for rebates in 2026, with $1 billion in total rebates funded through 2030 by utilizing funding from the Low Carbon Fuel Standard.
“The governor’s announcement highlights California’s continued push toward electrification of medium- and heavy-duty fleets despite rollbacks of major trucking and fleet emission regulations.” Ag Council President Emily Rooney said. “This funding may provide eligible Ag Council members with a key opportunity to receive funds for electrification prior to new regulatory actions from the current, or future, Administration.”
To read Governor Newsom’s full statement click HERE.
For more information on the CCFR rebate program and other funding opportunities for fleet electrification click HERE.