NRDC: Big Oil Extracts Windfall in Latest Cap-and-Invest Regs

SAN FRANCISCO – California’s proposed cap-and-invest regulations cede a significant and undeserved windfall to Big Oil, according to experts at NRDC (Natural Resources Defense Council). The Trump Administration has lavished fossil fuel interests with policy gifts and tax breaks from their first day in the White House, making the concessions to Big Oil in California an alarming sign of a broader national trend. 

Following is reaction from Merrian Borgeson, California policy director for climate and energy at NRDC: 

“The oil industry is not — and cannot be — the architect of California’s future. While the proposed cap‑and‑invest regulations preserve a core climate program and expand support to help lower electric bills, they also provide a basket of goodies to the fossil fuel industry at the expense of community health and real climate progress. California remains far too vulnerable to oil and gas fearmongering, and these giveaways reflect that imbalance of power.” 

“California needs to finalize these regulations expeditiously, and we urge CARB to consider ways to reduce the handouts in the final regulations. But finalizing the program is only one tool in the state’s toolbox to fight climate change and clear the air. State leaders must also act this year to reduce the oil industry’s grip on our economy and accelerate a clean energy transition that protects communities, including by directing 100 percent of the greenhouse gas reduction fund to climate action and community health and doubling down on a managed transition to zero‑emission transportation.” 

Additional background: 

• CARB’s updated draft cap-and-invest regulations would reduce the stringency of emissions reductions required for industrial facilities through 2030. This additional assistance above what was proposed in the previous version of the draft regs is not aligned with the direction from AB 1207 (Irwin, 2025) which required CARB to reduce these free pollution permits based on leakage risk.  
• The proposed regulations also significantly expand the Manufacturing Decarbonization Incentive (MDI) program by doubling the number of pollution permits in this fund and allowing industries that have few viable decarbonization solutions to participate, such as refineries, asphalt, industrial gas, chemical manufacturing, and certain petroleum and oil products. These pollution permits were originally proposed to be removed from the C&I program. While the MDI in its original form was important for backfilling federal funding lost for industrial decarbonization, the proposed expansion of this fund includes insufficient oversight and clarity about the allowable uses of these permits to ensure that emission reductions result from the use of these permits. 

• On the positive side, the regulations would improve electricity affordability and maintain incentives for greater electrification throughout the state by providing more credits on electric bills.  

• The regulatory package also maintains the ability to link with Washington state’s program. 

NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law and people power to confront the climate crisis, protect public health and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Beijing and Delhi (an office of NRDC India Pvt. Ltd).