Oil pumpjack, Hwy 101, San Ardo, CA, Monterey County. (Photo: Katy Grimes for California Globe)
CARB Approves Cap-and-Invest Amendments Ignoring ‘The Stark Reality’ Driving In-State Refining Capacity to Zero’
California is not a sovereign nation, nor is it an island
By Katy Grimes, May 30, 2026 7:00 am
The California Air Resources Board approved amendments to the Cap-and-Invest program (formerly Cap-and-Trade) Thursday ignoring ‘The Stark Reality’ Driving In-State Refining Capacity to Zero of CA’s Remaining 7 Refineries.
California’s cap-and-trade program, recently renamed “cap and invest,” places a “cap” on aggregate greenhouse gas emissions from businesses and utilities deemed “polluters” by the California Air Resources Board, which the CARB says are responsible for most of the state’s greenhouse gas emissions.
Readers may remember in February the Globe reported that PBF Energy Inc. and its subsidiaries, which own and operate six domestic oil refineries, including two in Torrance and Martinez, laid bare the impending disaster the CARB could unleash on California. PBF sent a letter to the California Air Resources Board warning about “the stark reality the impacts the current CARB Cap & Investment program would have because of the state’s remaining 7 refineries. And, CARB’s “Proposed Amendments will only worsen the current state of the program, making costs skyrocket further. If enacted as written, the Proposed Amendments will inevitably drive in-state refining capacity to zero.”
PBF has a huge impact on fuels in California.
CARBs proposed amendments are draft amendments to Assembly Bill 1207 by Assemblywoman Jacqui Irwin (D-Thousand Oaks), seeking to extend the cap and trade program to 2045, and legislators are looking at significant changes to the California emissions trading program, now known as California Cap and Invest. It also revises offset limits, establishes an emissions containment reserve, and proposes shifting free allowance allocations from gas companies to electric utilities.
Is the CARB really trying to force all in-state refineries to close?
“Since 2020, when gasoline supply was relatively balanced, five in-state refineries either shut down permanently or completely curtailed gasoline production” says PBF.
CARB couched the amendments as a balanced approach addressing climate goals and economic realities, which many industries have already expressed deep concerns with. But PBF was way ahead of the CARB with their February warning:
“The existing C&I regulations and Proposed Amendments will effectively drive in-state refiners out of business while importers are completely shielded from these costs. This is the central flaw in the current stationary source program. The Proposed Amendments as written will only exacerbate the cost imbalance between California’s refiners and importers.”
The Western States Petroleum Association sent out a response Friday to the CARB’s approval of Cap-and-Invest regulation amendments, “acknowledging modest near-term relief while raising significant concerns about the program’s future and its consequences for refinery investment, consumer costs and California jobs.”
“We appreciate the work that went into this framework, and there are elements in this proposal that move in the right direction,” said WSPA President and CEO Jodie Muller. “Still, California refineries need long-term certainty to make the investments that keep energy reliable and affordable for consumers – and right now, that certainty stops at 2030. In the months ahead, California must work to ensure a regulatory environment that attracts investment and allows in-state refiners to compete in a global market.”
“WSPA called on CARB and the Administration to provide policy certainty beyond 2030 and to address outstanding questions about the practical accessibility of credits under the Manufacturers Decarbonization Incentive program before these program updates are implemented.”
According to the CARB, some of the Key Elements of the Approved Amendments include:
- Tightening/reducing emission allowance budgets.
- Manufacturing Decarbonization Incentive (MDI): A controversial new mechanism reclassifies some allowances for industries (especially refineries and manufacturers) to support decarbonization investments. Critics argued it weakens the cap’s integrity by adding extra allowances; supporters see it as necessary for economic feasibility and preventing “leakage,” a bureaucratic term which means losing businesses to other states.
Cap-and-Invest program sets a declining cap on greenhouse gas emissions from major sources like power plants, refineries, manufacturing and large industries, and allows covered entities to buy and trade allowances – kind of like a get-out-of-jail-free card, but at a significant cost. CARB Cap-and-Invest Auction revenues fund California’s “climate projects,” some utility bill credits, and other initiatives via the Greenhouse Gas Reduction Fund.
The Greenhouse Gas Reduction Fund was a $27 billion program tucked into President Joe Biden’s 2022 Inflation Reduction Act, passed entirely along party lines. It was a top-down climate spending with heavy bureaucracy, political favoritism, and dubious measurable returns, which funneled grants through the EPA for “zero-emission technologies,” clean energy projects, and especially benefits to “low-income and disadvantaged communities.” President Trump and EPA Administrator Zeldin repealed Section 134 of the Clean Air Act and rescinded the funding for the Greenhouse Gas Reduction Fund (GGRF).Earlier in 2025, EPA Administrator Zeldin terminated $20 billion in GGRF funding that was awarded to eight National Clean Investment Fund and Clean Communities Investment Accelerator entities as serious concerns were raised regarding self-dealing and conflicts of interest, unqualified recipients, and reduced government oversight.
President Donald Trump issued an executive order in April of 2025 that targeted California’s climate change laws and policies, specifically naming California’s sketchy Cap and Trade program, which ostensibly facilitates greenhouse gas emission reductions.
Trump has been an advocate of “all of the above” energy policy, including nuclear power.
From Trump’s 2025 executive order “PROTECTING AMERICAN ENERGY FROM STATE OVERREACH:”
My Administration is committed to unleashing American energy, especially through the removal of all illegitimate impediments to the identification, development, siting, production, investment in, or use of domestic energy resources — particularly oil, natural gas, coal, hydropower, geothermal, biofuel, critical mineral, and nuclear energy resources.
Trump’s order singles out California’s cap and trade program, run by the equally sketchy California Air Resources Board:
California, for example, punishes carbon use by adopting impossible caps on the amount of carbon businesses may use, all but forcing businesses to pay large sums to “trade” carbon credits to meet California’s radical requirements. Some States delay review of permit applications to produce energy, creating de facto barriers to entry in the energy market. States have also sued energy companies for supposed “climate change” harm under nuisance or other tort regimes that could result in crippling damages.
PBF Energy Inc. warned in February, “The status quo of the C&I program will severely undermine the viability of in-state refining, with potentially devastating consequences for California’s fuel supply, economy, and workers. The Proposed Amendments will make the situation exponentially worse by increasing in-state refiners’ stationary payments. Before finalizing the proposed rule, we urge CARB to address the state’s gasoline supply-demand imbalance by revising the current C&I payment schedule and Proposed Amendments to put in-state refiners on equal regulatory footing with fuel importers.”
It will be interesting to see how the Trump administration weighs in on the latest CARB-approved amendments. California is not a sovereign nation, nor is it an island.
A California native and Navy mom, Katy lives in Sacramento, CA.
- CARB Approves Cap-and-Invest Amendments Ignoring ‘The Stark Reality’ Driving In-State Refining Capacity to Zero’ - May 30, 2026
- Gavin’s New Grift: Newsom Announces He is Awarding $80 Million in Funding to 343 Nonprofits and Faith-Based Orgs - May 29, 2026
- Gov. Newsom Proposes 100% Tax on Trump’s January 6 ‘Anti-Weaponization Fund’ - May 27, 2026
