The California Air Resources Board adopted its Cap-and-Invest Program amendments on May 28–29, 2026, implementing AB 1207's extension of California's carbon market through 2045. For energy-intensive, trade-exposed (EITE) manufacturers, the adopted package looks meaningfully different from the January proposal — in ways CLECA's comments specifically urged.
What changed between proposal and adoption
The 15-Day Modifications raised Cap Adjustment Factors for 2027 and slowed their decline through 2030, materially improving near-term leakage protection relative to the original proposal — which CLECA had shown would drop industrial allocation coverage to roughly 28% by 2035, below every comparator carbon market. Post-2030 CAFs were removed from the rulemaking entirely, to be addressed in a future proceeding where CLECA will continue pressing its border carbon adjustment sequencing argument.
The Manufacturing Decarbonization Incentive
The amendments create the MDI: roughly 118 million allowances — on the order of $4 billion — reserved for industrial facilities undertaking major on-site decarbonization projects. CLECA's engagement helped shape the final design: a flat 0.8 CAF modifier instead of a steeply declining schedule, a spending window extended to six–seven years to match real industrial project timelines, a first application deadline of June 1, 2027, and broader technology-neutral eligibility — engineering and study costs are now included, along with carbon capture capital.
CLECA's full positions are on our Cap-and-Invest & MDI page; the rulemaking record is at CARB's docket.