On November 12, 2025, CLECA submitted comments to CARB Chair Lauren Sanchez following the October 29, 2025 Cap-and-Invest Program Workshop. The comments focus on industrial allowance allocation and on mitigating emissions leakage under AB 1207 (Irwin) and SB 840 (Limón).
Competitive pressure is driving real leakage
CLECA opened by connecting California’s industrial electricity costs directly to leakage risk.
Over the past decade, the competitive pressures facing high-energy, emissions-intensive, and trade-exposed industries have deepened as electricity prices for large industrial customers have risen to “more than two-and-a-half times the U.S. average.”
This EITE sector affordability crisis has hindered investment in California, and in some cases, it has also driven production to regions with weaker environmental standards and higher-emission grids… Such shifts do not reduce global greenhouse gas (GHG) emissions; instead, they relocate them beyond California’s regulatory reach, undermining CARB’s ability to effectively regulate emissions and leading to diminished economic opportunities for Californians.
What AB 1207 requires
CLECA anchored its requests in the statute that extended the program through 2045.
AB 1207 also expressly requires CARB to “minimize leakage,” and directs that industrial sector allowances be allocated “in a manner that minimizes emissions leakage risk.”
The leakage assessment is out of date
CLECA pressed for transparency and an updated leakage assessment, noting how far conditions have shifted since CARB’s 2016 study.
California’s industrial electricity prices have risen by roughly 84.4% compared to a 20.6% increase in the U.S. industrial average… California’s industrial electricity rates are now approximately 250% higher than those in neighboring states.
A clear example of the reality of emissions leakage… is the closure of California’s last operating steel melting facility in Rancho Cucamonga in 2019, where high electricity prices were cited as a primary factor. This closure eliminated in-state steel production, forcing reliance on imports from regions with higher-emission grids…
Maintain allocation under Concept 2, and strengthen it
On the workshop’s central question, CLECA backed the stronger of the two allocation concepts and urged CARB to go further.
CLECA supports CARB’s Concept 2 over Concept 1 for industrial allocation as a more suitable and balanced pathway for supporting EITE industries under the modified annual allowance budgets.
The proposed allocation reflecting Concept 2 CAFs does not provide adequate protection against asymmetric competitive pressures stemming from the general affordability crisis, most notably with skyrocketing electricity rates.
Pause CAF reductions until a border carbon adjustment exists
CLECA tied any further tightening to the absence of a border mechanism, noting how low California’s coverage already is.
industrial sectors in California receive only about 60% of their covered emissions as free allowances. This allocation level falls well below the coverage provided under peer programs such as Washington’s (100%) and Québec’s (99%).
In the absence of such mechanisms, CLECA recommends that CARB temporarily pause the CAF for EITE industries to preserve effective leakage mitigation while longer-term market solutions are developed and evaluated.
Fund decarbonization additively, and back proven projects
CLECA supported a Manufacturing Decarbonization Incentive but insisted it not be drawn from existing allocations.
such a program should be additive to, not drawn from, existing industrial allocations. Redirecting allowances from the EITE framework to fund facility decarbonization projects would undermine the integrity of current leakage protections. This should be avoided at all costs…
Support should not be prioritized for unproven, speculative or early-stage technologies that lack commercial deployment, near-term reduction potential, or scalable application.
Read the filing
The excerpts above are drawn from CLECA’s filing. Read the complete comments here: