​​CARB Releases C&I 15-Day; Bringing Affordability Front and Centre as Amendments Propose more Industrial Assistance​

Key Takeaways

• CARB released their 15-day amendment package (“15-day”), directly addressing concerns raised by stakeholders for the 13^th January 2026 ISOR. As presented in cCarbon’s comment analysis, there was significant pushback against the reduction in no-cost allocations for several industries. The 15-day aims to address these concerns.
• Cap Adjustment Factors (CAFs) have been increased across the board, which in turn would increase the free allocations in the program.
• At the same time, all free allocation determinations post 2030 have rescinded. CARB has stated that these changes are due to public comments, and they wish to spend more time evaluating emissions leakage risk before setting post 2030 allocations.
• The Electricity Distribution Utility (EDU) allocations proposed in the ISOR has been increased. The 15-day version of these allocations for 2027-29 has less allocations than current regulation but more than the ISOR proposal. However the 2030 allocation total is higher than the current regulation.
• CARB has created a new account, “Build up California Reserve Account” aimed at providing allowances for the manufacturing decarbonization incentive program – CARB has stated that this account will be filled with the 118,.3 M allowances that would be removed in the course of the inventory adjustment.
• NG to EDU allocation transition schedule has been accelerated as per feedback from legislature, but 2030 trajectory remains unclear.
• The deadline for corporate association group (CAG) purchase limit shares and holding limit shares brought forward to Dec 31, 2027 compared to Dec 31, 2029, before.
• Strengthening for retiring DEBs in the market post-full verification cycle.
• cCarbon will conduct a webinar on 21^st April, presenting the impact of the 15-day package on the demand and supply outlook as a result of these proposed changes. Register here.

CARB 15-Day Brings in Affordability Front and Center by Increasing Industrial Assistance Across the Board

As stated in our comment analysis for the ISOR, a significant amount of comments concerned the proposed reductions in industrial allocations. The current 15-day notice released by CARB, seems to address all of these concerns by providing more allocations across the board, increasing CAFs and creating more opportunities for cost containment by incentivizing decarbonization.

Interestingly, it seems that the supply changes proposed – net-net, bring us back to the pre-inventory adjustment program. However, due to the cap still being strengthened post 2030, and allocations being potentially increased, we expect auction supply to reduce in the coming years.

One interesting piece is that CARB has withdrawn their proposed post-2030 CAFs, as well as EDU allocations. They state the following for the CAF change: “As directed in AB 398 and AB 1207, CARB staff is continuing to evaluate cap adjustment factors and additional and complementary mechanisms after 2030 to address the risk of emissions leakage related to both covered industrial emissions and products that are not currently covered by the Program. Post-2030 allocation will also be informed by updated data on leakage as available. As such, CARB is removing the CAFs for 2032-2035 that were proposed in the 45-day Amendments as well as the CAFs for 2031. This change is responsive to public comments and necessary to provide more time for CARB to analyze emissions leakage risk for covered facilities before setting post-2030 cap adjustment factors in a future rulemaking.”

 For EDUs they state the following: “…as CARB is no longer proposing to set post-2030 EDU allocation in this rulemaking. This change was made in response to public comments that requested additional time to further develop the methodology for the post-2030 EDU allocation. Post-2030 allocation will be addressed in a future rulemaking in order to provide sufficient time for this work.”

Utility (EDU) Allocations Higher than ISOR Proposal

With regards to the EDU Allocation changes, the 15-day notice has a more generous allocation schedule

As the data suggests, allocations for 2027-29 are higher than the ISOR version but lower than the current regulation. However, the allocations in 2030 are higher than the current reg.

Cap Adjustment Factors (CAFs) Have Been Increased

As the table above suggests – the Cap Adjustment Factors have been increased across the board, with actual increases in the case of standard activities. This is in line with comments and proposals received from refineries and related entities.

Manufacturing Decarb Allocation Incentive Overhauled, New “Build up California Account” Adds New Allowances Equal to Proposed Inventory Adjustment

Joining the Allowance Removals for offset usage account is another new account, the “Build up California account”, aimed at providing allowances for manufacturing decarbonization incentive program – CARB has stated that this account will be filled with the 118.3 M allowances that would be removed in the course of the inventory adjustment. These are not technically under the proposed caps, and are separate allowances that can be banked, traded etc but can be initially obtained by the manufacturing decarbonization allocation program.

The exception list for eligible entities has been significantly reduced, with only oil and gas extraction largely still being on the list. However, there is a new CCUS carve out where investment in carbon capture and storage would make them eligible for the allocation. CARB also states that they have simplified the mechanism by doing the following: “The number of MDI allowances provided to each eligible facility is determined using a flat CAF Modifier of 0.8, which replaces Table 9-2a in the 45-day Amendments which differentiated CAF Modifiers by sector and budget year. This revised approach is necessary to provide consistent treatment across all eligible industrial sectors,”

NG to EDU Transition Accelerated but 2030 Trajectory Remains Unclear

CARB states the following on the transition: “Further, Table 9-6A was updated to change the annual percentages of allowances that must be transitioned from natural gas investor owned utilities to EDUs, as directed by AB 1207 and pursuant to section 95893(b)(1)(A)(1), for 2028-2031, and to delete the post-2031 percentages. Multiple interested parties, including the author of AB 1207, commented that the proposed transition in the 45-day Amendments was too slow and expressed that an accelerated transition by January 1, 2031, with protections maintained for low-income ratepayers, would be better aligned with AB 1207. The updated percentages in Table 9-6A are responsive to this feedback, with the transition starting one year earlier and with 70% of NGS allowances transferred to EDUs by budget year 2031.”

On post-2030 trajectory, CARB stated the following: “Post-2031 percentages are deleted because cap adjustment factors for those years will be determined in a future rulemaking”

Corporate Association Group (CAG) Changes Brought Forward from 2029 to 2027

CARB states the following for the decision – “In section 95833(f)(1), the delayed deadline for identifying corporate association group (CAG) purchase limit shares and holding limit shares is shortened from December 31,2029 to December 31, 2027. Additionally, a change is made to clarify that for new or updated CAGs involving a new applicant pursuant to section 95833(a)(6) and (a)(7), all

members of the group must disclose the required information including purchase limit and holding limit shares pursuant to section 95833(d). The timing of this disclosure is described in section 95833(e), and the entities are ineligible for the delayed deadline for the disclosure of purchase and holding limit shares. The shortened deadline balances concerns related to short-term price volatility upon immediate implementation of CAG holding limit shares and purchase limit shares and concerns related to unintended market incentives related to a longer deadline. Staff analysis based on the most recent information suggests that the number of allowances released to the market from entity holding accounts due to implementation of the proposed CAG rules may be toward the low end of the previously expected range, making a shorter deadline more feasible”

Provisions for Strengthening Offset DEBs

CARB proposes that it may revoke DEB status for certain unretired offset credits that were issued since the last full verification. CARB states the following: “the proposed text in 45-day Amendments establishing that CARB may revoke the direct environmental benefits in the State designation for unretired offset credits that were issued since the last full verification was moved from section 95977(b)(3)(D)2.i. to section 95989(e) because that text is more appropriate in this section. Text on revoking the direct environmental benefits in the State designation of offset credits now appears only in this section and not in section 95977.1(b)(3)(D)2.i. In addition, new text in section 95989(e) specifies that CARB will remove the direct environmental benefits in the State designation from offset credits issued to the project going forward, in addition to revoking the designation from any previously issued offset credits that are both unretired and from reporting periods since the last full verification. By limiting the scope of revoking to unretired offset credits, the revocation will not create an obligation on entities that have previously retired these offset credits to satisfy a compliance obligation to replace the credits with credits that do have direct environmental benefits in the State designation. These changes are necessary to ensure that the planned activities, upon which an out-of-state project is seeking a direct environmental benefits in the State designation, are actually occurring and providing direct environmental benefits in the State.”

cCarbon Will Conduct a Webinar on 21st April 2026 to Share Our Outlook

Register for our upcoming webinar on 21^st April 2026 as we unpack key takeaways from this long-awaited regulatory package and share our updated demand, supply and price outlook. Register here

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Analyst Contact

• Mitul Kaushal (mkaushal@ckinetics.com