It has taken 20 years, but the blithering idiocy of the Global Warming Solutions Act of 2006 is now fully exposed. The California Air Resources Board’s latest regulatory update of its “cap-and-invest” program, previously known as “cap-and-trade,” is under fire from all directions.
Oil industry giant Chevron said the new regulation threatens the stability and long-term capital investments “necessary to reliably supply transportation fuels,” while a long list of state Senate and Assembly Democrats complained the same regulation is “cementing reliance on fossil fuels through costly, inefficient subsidies.”
A coalition of labor, transit and community housing groups complained that the regulatory update will cut $2 billion from the funding on which they rely for their programs, while the bipartisan legislative “Problem Solvers Caucus” groused that cap-and-invest was not supposed to be “a revenue program.”
At issue is a set of proposed 2026 amendments to the cap-and-invest regulation. The California Air Resources Board, also known as CARB, operates this program, first authorized in the 2006 legislation aimed at reducing California’s greenhouse gas emissions. CARB was required to report and verify greenhouse gas emissions, monitor and implement regulations to reduce emissions, and adopt a gradually tightening limitation on emissions between 2010 and 2020, extended in later legislation.
How was this state air-quality agency supposed to reduce emissions in the private sector? By creating regulations that strangled energy production and manufacturing and then accepting payments for loosening the rope.
This latest regulatory update attempts to mitigate the political damage from adding these costs to the price of electricity, gasoline, natural gas and just about everything in California that is manufactured or transported.
CARB gives away a certain number of these “allowances” or “permits” to emit greenhouse gases. This act of totalitarian mercy finances what’s known as the “climate credit” on your energy bill. You pay more for everything, and a little discount on your electricity and gas bill is supposed to make you grateful to the politicians who take credit for it.
Is that working? It seems to have stopped working. Lately, elected officials are talking more about affordability, but CARB does not have a legal mandate to lower energy costs. Its legal mandate is to regulate greenhouse gas emissions to the maximum feasible reductions that are cost-effective.
If the regulators at CARB measure a regulation’s cost to consumers against the hypothetical cost of mass death from climate change, any regulation easily clears the cost-effectiveness hurdle. However, the effectiveness of the regulations cannot be demonstrated. Claims of emission reductions are never measured against actual data showing an effect on the global climate, because what California does has no effect on the global climate. Even claims that emissions have been reduced should be viewed in light of the selective criteria used in measurement. Wildfire emissions, for example, are not included in the calculations. They’re tallied separately, as if on another planet.
CARB oversees an arbitrary structure of prohibition and permission. Through the years, this power has been monetized for the political gain of the people who have voted to keep it going through 2045.
In the most egregious example, the California High-Speed Rail project now receives $1 billion per year from the sale of “allowances” for greenhouse gas emissions. If you personally benefit from the spending on the bullet train, you’re a winner in this system. If all you get is higher prices from the passed-through cost of purchasing “allowances,” you may want to consider voting against people who continue to support this useless cap-and-invest scam.
The Problem Solvers Caucus pointed out in their May 4 letter to CARB chair Lauren Sanchez that the cap-and-trade program was not proposed as “a revenue program” (a euphemism for “tax”). The lawmakers point to the original 2006 law, Assembly Bill 32, directing “cost-effective reductions,” and to the subsequent Senate Bill 32 reinforcing that mandate in 2016. AB 398 in 2017 “added explicit obligations to minimize leakage and ratepayer costs,” and AB 1207 in 2025 directed CARB “to design regulations that minimize ratepayer impacts” instead of considering affordability “downstream.”
“Leakage” is what happens when California makes it so costly and difficult to operate that companies generate electricity or produce oil outside of the state, producing carbon emissions that CARB doesn’t get to count or limit by selling “allowances” for cash.
Advocates in the “we want the cash” coalition really don’t like CARB’s new plan, which increases free allowances given to utility companies to help pay for a “climate credit” on customers’ bills. They say it will reduce revenue to the Greenhouse Gas Reduction Fund “by nearly $2 billion annually” and “zero out hard-fought annual funding” that supports “affordable transit-oriented housing and major transit projects, deployment of zero-emission vehicles, transit service, free fare and discounted transit passes.”
The new CARB regulatory amendments, set to be finalized on May 28, earned the opposition of the oil and gas industry, too. Chevron president Andy Walz raised concerns that CARB has not revealed its “Cap Adjustment Factors” beyond 2030, which makes long-term planning for petroleum refineries and crude producers “difficult.” This will “only increase the likelihood of leakage occurring,” he wrote.
That’s another way of saying more refineries will close, and California could become 100% dependent on imported fuel.
The cap-and-invest program is a monstrous Dracula bleeding California’s economy and residents, and it’s an insane method of funding government programs. If the Legislature wants to spend money on transit, or transit-oriented housing, or anything else currently funded by the sale of “allowances,” lawmakers could prioritize funding from the budget. They could also vote for a tax increase, or ask voters to approve more taxes, debt and spending.
We can guess how that would go.
And that’s the only reason California has a “cap-and-invest” program. It has no effect on the climate. It’s a hidden tax, and a very regressive one, to pay for things a majority of voters don’t think are worth more of their money.
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