California is considering a major overhaul of its carbon market that would provide oil refineries and other large polluters with billions of dollars in free pollution permits, just as the state aims to accelerate its emission reduction targets. - The proposal would create a new pool of up to 118.3 million free permits for companies that pledge to invest in clean energy.
- Environmentalists argue this could weaken the cap-and-invest program and reduce auction revenue from $4 billion to $2 billion annually. - The oil and gas sector spent $10.3 million lobbying Sacramento in the first quarter of 2026.
- Governor Newsom's administration defends the changes as necessary to keep the carbon market durable and affordable. The debate highlights tensions between lowering emissions and keeping gasoline affordable in a state with the highest gas prices in the nation.