SACRAMENTO — Gov. Gavin Newsom is facing one of the most organized challenges of his tenure as Western governors, state lawmakers, and national energy companies line up against the California Air Resources Board’s sweeping Cap-and-Invest overhaul.
What began as industry warnings about a costly new regulatory framework for its Cap-and-Invest program has escalated into a full political fight, one stretching across party lines, state lines and the broader Western energy market. At the center of this battle is Democratic dissent joining a unified Republican resistance, amplified by neighboring governors who argue California’s fuel policies are no longer confined to California.
CARB’s proposal would remove 118.3 million allowances between 2027 and 2030, tightening a market that now adds roughly 24 cents per gallon to fuel prices. Industry letters to Newsom warn allowance prices could rise toward $135 per metric ton (about $1.21 per gallon), for an estimated total of $15.97 billion, and an estimated $1-per-gallon increase by 2030.
